GBP/USD hit 1.5489 on Thursday, the weekly low; the pair settled at 1.5636 by close of trade on Friday, down 0.62% on the week.
Cable is likely to find support at 1.5489, Friday’s low and resistance at 1.5735, last week’s high.
The greenback came under broad selling pressure on Friday after European Central Bank President Mario Draghi indicated Thursday that the bank would restart its bond buying program, to help lower Spanish and Italian borrowing costs.
Markets initially turned lower following Draghi’s remarks, after he indicated that any intervention by the ECB to calm bond markets would not come before September.
Draghi also said that any steps by the ECB were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Investor sentiment was also boosted after the U.S. Department of Labor said the economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000, following a downwardly revised increase of 64,000 the previous month.
However, the U.S. unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in the preceding month, keeping alive speculation over further monetary stimulus from the Federal Reserve.
On Wednesday, the Federal Reserve refrained from implementing fresh easing measures following its policy meeting, but the central bank said economic growth had slowed in the first half of the year and reiterated that it stood ready to provide additional stimulus as necessary.
The Bank of England’s monetary policy committee kept the benchmark interest rate unchanged at 0.5% on Thursday and held the size of its quantitative easing program at GBP375 billion.
The announcement came one day after a report showing that manufacturing activity in the U.K. contracted at the fastest pace in more than three years in July, fuelling expectations for another round of easing by the BoE in the coming months.
In the week ahead, market participants will continue to keep a close eye on developments in the euro zone, as investors continue to digest the implications of the ECB's recent decisions.
Markets will also be paying close attention to speeches by Fed Chairman Ben Bernanke on Monday and Tuesday, amid ongoing speculation over the possibility of more easing from the U.S. central bank.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 6
In the U.S., Fed Chairman Ben Bernanke is to speak; his comments will be closely watched for any indications of the future possible direction of monetary policy.
Tuesday, August 7
The U.K. is to publish official data on manufacturing and industrial production, leading indicators of economic health. The country is also to publish industry data on retail sales.
Later Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington DC.
Wednesday, August 8
The BoE is to publish its inflation report, which gives investors a valuable insight into the bank's view of economic conditions and inflation.
The U.S. is to release government data on labor costs and productivity, leading indicators of consumer inflation. The country is also to release official data crude oil stockpiles.
Thursday, August 9
The U.K. is to release official data on the trade balance, the difference in value between imported and exported goods.
Later in the day, the U.S. is to publish its weekly report on initial jobless claims as well as a report on the trade balance.
Friday, August 10
The U.K. is to publish data on producer price inflation input, a leading indicator of consumer inflation.
The U.S. is to round up the week with official data on import prices and the federal budget balance.
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