Investing.com - The pound pulled back from more than five year highs against the dollar on Friday but remained supported above the 1.70 level by expectations that the Bank of England will raise interest rates ahead of its major peers.
GBP/USD slipped 0.15% to 1.7014 late Friday, down from highs of 1.7062 reached on Thursday, the strongest level since October 21, 2008. For the week, the pair gained 0.22%.
Cable was likely to find support at 1.6950 and resistance at 1.7064.
Sterling has strengthened this year amid expectations that the accelerating economic recovery will prompt the BoE to raise interest rates sooner than other central banks.
Wednesday’s minutes of the BoE’s June meeting showed that the bank was "somewhat surprised" that the financial markets were pricing in a low probability of interest rates rising this year.
Some monetary policy committee members believe the question of whether enough spare capacity has been absorbed has become "more balanced" since last month the minutes said.
BoE Governor Mark Carney said earlier this month that rates could rise sooner than investors expect. The remarks prompted investors to bring forward expectations for a rate hike to the end of this year from the first quarter of 2015.
The greenback remained under pressure after the Federal Reserve indicated Wednesday that rates would remain on hold for longer, despite the improving U.S. economic outlook.
At the conclusion of its two-day policy meeting, the central bank cut its bond purchases by $10 billion, to $35 billion a month, saying there was "sufficient underlying strength" in the U.S. economy to continue tapering.
Despite this, the Fed lowered its forecast for growth this year due to "unexpected contractions" in the first quarter as a result of the unusually harsh winter.
The Fed acknowledged the recent increases in inflation and drop in unemployment, but Chair Janet Yellen said no formula was in place for when interest rates would start to rise.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up to 80.41 late Friday from lows of 80.24 on Thursday. For the week, the index lost almost 0.3%.
In the coming week, the U.S. is to release data on consumer confidence, durable goods orders and home sales, while the BoE is to publish its financial stability report.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 23
The U.S. is to release preliminary data on manufacturing activity and private sector data on existing home sales.
Tuesday, June 24
The U.S. is to release private sector data on consumer confidence, as well as a report on new home sales.
Wednesday, June 25
The U.K. is to release private sector data on retail sales.
The U.S. is to publish data on durable goods orders, as well as revised data on first quarter growth.
Thursday, June 26
The BoE is to publish its financial stability report and Governor Mark Carney is to hold a press conference to discuss the report.
The U.S. is to release data on personal income and expenditure, as well as data on inflation linked to personal spending.
Friday, June 27
The U.K. is to produce data on the current account and final data on first quarter growth.
The U.S. is to round up the week with revised data on consumer sentiment.