Investing.com - The pound was lower against the U.S. dollar on Friday, following the release of weaker-than-expected U.S. jobs data but sterling remained supported by the view that the currency is a good alternative to the euro and the dollar.
GBP/USD hit 1.6300 on Monday, the pair’s highest since August 31; the pair subsequently consolidated at 1.6144 by close of trade on Friday, shedding 0.77% over the week.
Cable is likely to find support at 1.6080, the low of April 25 and resistance at 1.6201, Friday’s high.
The Department of Labor said the U.S. economy added 115,000 jobs in last month, far short of expectations for a 170,000 increase, after adding an upwardly revised 154,000 jobs in March.
The unemployment rate ticked down to 8.1% but the labor participation rate also declined, as fewer people sought jobs.
The weak data added to uncertainty over the strength of the U.S. recovery and fuelled speculation the Federal Reserve could implement a third round of quantitative easing measures to stimulate growth.
Market sentiment was also hit by concerns over political uncertainty in the euro zone, in the run-up to weekend elections in Greece and France, amid fears leadership changes could hinder attempts to resolve the region's debt crisis.
The pound touched an eight month high against the greenback earlier in the week, before coming under pressure amid concerns over the outlook for the recession hit U.K. economy.
Data on Tuesday showed that manufacturing activity in the U.K. contracted in April, albeit less than expected, as a result of sluggish overseas demand, particularly from the euro zone.
Other reports last week showed that construction sector activity in the U.K. declined less-than-expected in April, while U.K. mortgage approvals rose unexpectedly in March.
In the week ahead, investors will be closely watching election results in Greece and France, while in the U.S. a speech by Fed Chairman Ben Bernanke in Chicago on Thursday the main focus for the greenback.
Also Thursday, the Bank of England is to announce its benchmark interest rate and any changes to the size of its asset purchase program.
In addition, China is to release a flurry of data, including reports on retail sales and inflation that will allow investors to gauge the strength of the world’s second largest economy.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 7
Markets in the U.K. are to remain closed due to a national holiday.
Tuesday, May 8
The U.K. is to publish industry data on house price balance, a key indicator of housing inflation.
Wednesday, May 9
The U.K. is to release industry data on retail sales, an important indicator of economic health.
Later Wednesday, the U.S. is to produce government data on crude oil stockpiles. The country is also to hold a 10-year government bond auction
Thursday, May 10
The U.K. is to publish official data on manufacturing production, a key indicator of economic health, as well as a monthly estimate of gross domestic product by the National Institute of Economic and Social Research. Also Thursday, the BoE is to announce its benchmark interest rate.
The U.S. is to produce official data on the trade balance, as well as government data on unemployment claims and import prices.
Additionally, the U.S. is to release government data on the federal budget balance and the Treasury currency report, while Federal Reserve Chairman Ben Bernanke is due to speak. His comments will be closely watched for any clues to the future possible direction of monetary policy.
Friday, May 11
The U.K. is to publish official data on producer price inflation input, a leading indicator of consumer inflation.
The U.S. is to round up the week with government data on producer price inflation, a key gauge of consumer inflation, followed by a preliminary report by the University of Michigan on consumer sentiment, a leading indicator of consumer spending.