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Forex - GBP/USD weekly outlook: June 9 - 13

Published 06/08/2014, 10:45 AM
Pound drifts lower against dollar after U.S. jobs report

Investing.com - The pound slid lower against the dollar on Friday after data showing that the U.S. economy added jobs for a fourth successive month in May bolstered optimism over the wider economic recovery.

The Department of Labor reported that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000, while April's figure was revised to 282,000.

The U.S. unemployment rate remained unchanged at a five-and-a-half year low of 6.3%.

GBP/USD touched highs of 1.6844 just after the release of the data, before slipping back to 1.6801 late Friday. For the week, the pair was still up 0.35%.

Cable is likely to find support at 1.6750 and resistance at 1.6880.

Elsewhere Friday, sterling was unchanged against the euro, with EUR/GBP settling at 0.8121, recovering from the one-and-a-half year lows of 0.8063 struck in the previous session.

The euro remained supported after the European Central Bank unveiled a package of measures to avert the threat of persistently low inflation in the euro area on Thursday.

The ECB cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses.

The ECB acted after a report earlier in the week showed that the annual rate of inflation in the euro zone slowed to 0.5% in May, far below the ECB’s target of close to but just under 2%.

Demand for the pound continued to be underpinned by expectations for a rate hike by the Bank of England in the early part of next year.

Data on Wednesday showed that the U.K. service sector expanded at a faster-than-expected rate in May, indicating that the economic recovery is continuing to deepen.

In the week ahead, investors will be looking ahead to Thursday’s U.S. retail sales report for further indications on the strength of the U.S. recovery, while the latest U.K. jobs report will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.

Tuesday, June 10

The U.K. is to release data on industrial and manufacturing production.

Wednesday, June 11

The U.K. is to publish data on the change in the number of people employed and the unemployment rate, as well as data on average earnings.

Thursday, June 12

The U.S. is to release the weekly report on initial jobless claims, in addition to data on retail sales and import prices.

BoE Governor Mark Carney is to speak at an event in London.

Friday, June 13

The U.S. is to round up the week with data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.

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