GBP/USD hit 1.6177 on Friday; the pair’s highest since October 5; the pair subsequently consolidated at 1.6171 by close of trade, 0.84% higher for the week.
Cable is likely to find support at 1.6083, and resistance at 1.6242.
The dollar weakened broadly on Friday after weak U.S. inflation data warranted continued monetary easing by the Federal Reserve.
The Department of Labor said U.S. consumer inflation fell 0.3% in November, down for the first time in six months on the back of lower gasoline prices, bringing the annualized rate of inflation to 1.8%.
The Federal Reserve said Wednesday that interest rates would remain close to zero as long as inflation forecasts remain near the bank’s 2% target and until the U.S. unemployment rate declines to 6.5% or less.
Sterling remained supported against the dollar but slid to an almost two-week low against the euro on Friday after ratings agency Standard & Poor's put the U.K.'s triple-A rating on negative outlook, and warned that it saw a one-in-three chance for a downgrade in the next two years.
In the week ahead, investors will be continuing to monitor the progress on talks in Washington on the fiscal cliff. Market participants will also be awaiting U.K. government data on inflation and retail sales, as well as Wednesday’s Bank of England minutes.
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