Investing.com - The pound was higher against the dollar on Friday as upbeat data on third quarter U.K. growth reinforced expectations that the ongoing recovery could prompt the Bank of England to raise interest rates early next year.
GBP/USD was up 0.33% to 1.6083 in late trade, to end the week little changed.
Sterling was boosted after the Office of National Statistics reported that gross domestic product expanded by 0.7% in the third quarter, slowing from 0.9% in the three months to June, but in line with forecasts.
On a year-over-year basis, GDP grew 3%, in line with forecasts, down from annual growth of 3.2% in the second quarter.
The dominant service sector continued to be the biggest contributor to growth, followed by production, which includes manufacturing. Construction growth also picked up in the third quarter the ONS said.
The data fuelled expectations that the broad based economic recovery in the U.K. could prompt the BoE to hike interest rates in the early part of 2015.
Sterling was also higher against the euro, with EUR/GBP down 0.16% to 0.7875 in late trade.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.19% to 85.79 late Friday. The index still ended the week higher, stabilizing following a steep selloff in the previous week.
Fears that a slowdown in global economic growth could act as a drag on the U.S. economic recovery have prompted investors to push back expectations for an increase in interest rates by the Federal Reserve to the second half of 2015.
In the week ahead investors will be looking ahead to the outcome of Wednesday’s Federal Reserve meeting amid expectations that it will wind up its asset purchase program.
Investors will be scrutinizing the Fed statement for further indications on how soon interest rates could start to rise.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 27
The U.K. is to release private sector data on retail sales.
The U.S. is to publish an industry report on pending home sales.
Tuesday, October 28
The U.S. is to release data on durable goods orders and a report by the Conference Board on consumer confidence.
Wednesday, October 29
The U.K. is to report on net lending to individuals.
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
Thursday, October 30
The U.K. is to publish private sector data on house price inflation.
The U.S. is to publish revised data on third quarter GDP, as well as the weekly report on initial jobless claims. Later in the day, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Friday, October 31
The U.S. is to round up the week with data on personal income and expenditure as well as revised data on consumer sentiment and a report on business activity in the Chicago region.