Investing.com - The pound hit eight month highs against the dollar on Friday after data showed that British construction output rose strongly in July, adding to optimism over the economic outlook.
rose as high as 1.5885, the highest since January 23, before settling at 1.5878, 0.46% higher for the day and extending the week’s gains to 1.15%.
Cable is likely to find support at 1.5774, Thursday’s low and resistance at 1.6005, the high of January 18.
Sterling strengthened after the Office for National Statistics said U.K. construction output grew 2.2% in July and was 2% higher on a year-over-year basis.
Construction output fell 1.1% on the month in June and rose 2.2% year-over-year.
The report came after data on Wednesday showed that the U.K. unemployment rate unexpectedly declined to 7.7% in July from 7.8% in June.
The data reinforced expectations that the Bank of England would raise interest rates sooner than it has indicated.
BoE Governor Mark Carney said last month the bank would keep rates on hold until the unemployment rate falls below 7%, something the bank does not see for another three years.
The dollar remained under pressure after lukewarm data on U.S. retail sales and consumer sentiment raised further doubts over whether the Federal Reserve will start to taper its USD85 billion-a-month stimulus program at its upcoming policy meeting on September 17-18.
The Commerce Department said U.S. retail sales rose 0.2% in in August, undershooting expectations for a 0.4% increase. The data added to concerns over the outlook for third quarter growth.
A separate report showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to a five month low of 76.8, from a final reading of 82.1 in August.
The reports came a week after the latest U.S. employment report showed that the economy added slightly fewer jobs than expected in August.
In the week ahead, investors will be keenly anticipating the outcome of the Fed’s policy-setting meeting on Wednesday, and a press conference with Fed chief Ben Bernanke will be closely watched.
Meanwhile, the U.K. is to publish data on retail sales and the Bank of England is to release the minutes of its latest meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.Monday, September 16
The U.S. is to publish the Empire state manufacturing index, in addition to data on industrial production and the capacity utilization rate.Tuesday, September 17
The U.K. is to release official data on consumer price inflation, as well as reports on producer price inflation and retail price inflation.
The U.S. is to release data on consumer price inflation.Wednesday, September 18
The BoE is to release the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
The U.S. is to release official data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts.
The Fed is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. Chairman Ben Bernanke is to hold a press conference after the rate announcement. Thursday, September 19
The U.K. is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as private sector data on industrial order expectations.
The U.S. is to release the weekly report on initial jobless claims, as well as the Philly Fed manufacturing index and data on existing home sales.Friday, September 20
The U.K. is to release government data on public sector net borrowing.