The pound dropped to two-and-a-half-year lows against the dollar on Friday after ratings agency Moody’s cut the U.K.’s triple-A sovereign rating and dovish Bank of England minutes boosted the likelihood of more stimulus measures.
GBP/USD hit 1.5129 on Thursday; the pair’s lowest since July 2010, before settling at 1.5174 at the close on Friday, down 0.50% and 2.0% lower for the week.
Cable is likely to find support at 1.4872 and resistance at 1.5272, Thursday’s high.
Moody’s cut the U.K.’s triple-A sovereign rating by one notch to Aa1 with a stable outlook late Friday, citing a weak outlook for growth and a rising debt burden.
"There is a risk that the U.K government may not be able to reverse the debt trajectory before the next economic shock or cyclical downturn in the economy," Moody’s said.
Earlier in the week, the minutes of the BoE’s February meeting showed that policymakers were split six to three on whether to increase the bank's quantitative easing program to GBP400 billion from GBP375 billion, with BoE Governor Mervyn King voting in favor of an increase.
At the previous meeting the voting had been eight to one in favor of keeping the stimulus program unchanged.
The dollar found support after the minutes of the Federal Reserve’s most recent policy meeting indicated that the bank may wind down its bond-buying program sooner than expected.
The minutes of the Fed’s January meeting showed that policymakers discussed the slowing or stopping of bond purchases even before the job market improves, amid concerns that the policy could cause instability in financial markets.
Sterling was lower against the euro on Friday, with EUR/GBP rising 0.49% to settle at 0.8690, up 0.76% for the week.
In the week ahead, sterling will come under increased selling pressure following Friday’s downgrade, while investors will also be awaiting political developments in Italy.
Testimony on monetary policy by Fed Chairman Ben Bernanke in Congress will be closely watched, while revised data on economic growth from the U.S., and the U.K. 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.
Monday, February 25
The U.K. is to publish industry data on mortgage approvals, an important indicator of demand in the housing sector.
Tuesday, February 26
The U.K. is to release industry data on retail sales, an important indicator of economic health.
The U.S. is to release a report on consumer confidence, as well as official data on new home sales, a leading indicator of economic health. The U.S. is also to release industry data on house price inflation. In addition, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee, in Washington DC.
Wednesday, February 27
The U.K. is to release revised data on fourth quarter economic growth, as well as preliminary data on business investments, a leading economic indicator.
The U.S. is to produce official data on durable goods orders, pending home sales and crude oil inventories. Meanwhile, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee for a second day, in Washington DC.
Thursday, February 28
The U.S. is to release revised data on fourth quarter economic growth, in addition to the weekly government report on initial jobless claims and official data on manufacturing activity in Chicago.
Friday, March 1
The U.K. is to release industry data on house price inflation as well as a report on manufacturing activity and net lending to individuals.
The U.S. is to round up the week with a report from the Institute of Supply Management on manufacturing activity, official data on personal spending and revised data on consumer sentiment from the University of Michigan.
Fed Chairman Ben Bernanke is to speak in San Francisco; his comments will be closely watched for indications on the future possible direction of monetary policy.
GBP/USD hit 1.5129 on Thursday; the pair’s lowest since July 2010, before settling at 1.5174 at the close on Friday, down 0.50% and 2.0% lower for the week.
Cable is likely to find support at 1.4872 and resistance at 1.5272, Thursday’s high.
Moody’s cut the U.K.’s triple-A sovereign rating by one notch to Aa1 with a stable outlook late Friday, citing a weak outlook for growth and a rising debt burden.
"There is a risk that the U.K government may not be able to reverse the debt trajectory before the next economic shock or cyclical downturn in the economy," Moody’s said.
Earlier in the week, the minutes of the BoE’s February meeting showed that policymakers were split six to three on whether to increase the bank's quantitative easing program to GBP400 billion from GBP375 billion, with BoE Governor Mervyn King voting in favor of an increase.
At the previous meeting the voting had been eight to one in favor of keeping the stimulus program unchanged.
The dollar found support after the minutes of the Federal Reserve’s most recent policy meeting indicated that the bank may wind down its bond-buying program sooner than expected.
The minutes of the Fed’s January meeting showed that policymakers discussed the slowing or stopping of bond purchases even before the job market improves, amid concerns that the policy could cause instability in financial markets.
Sterling was lower against the euro on Friday, with EUR/GBP rising 0.49% to settle at 0.8690, up 0.76% for the week.
In the week ahead, sterling will come under increased selling pressure following Friday’s downgrade, while investors will also be awaiting political developments in Italy.
Testimony on monetary policy by Fed Chairman Ben Bernanke in Congress will be closely watched, while revised data on economic growth from the U.S., and the U.K. 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.
Monday, February 25
The U.K. is to publish industry data on mortgage approvals, an important indicator of demand in the housing sector.
Tuesday, February 26
The U.K. is to release industry data on retail sales, an important indicator of economic health.
The U.S. is to release a report on consumer confidence, as well as official data on new home sales, a leading indicator of economic health. The U.S. is also to release industry data on house price inflation. In addition, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee, in Washington DC.
Wednesday, February 27
The U.K. is to release revised data on fourth quarter economic growth, as well as preliminary data on business investments, a leading economic indicator.
The U.S. is to produce official data on durable goods orders, pending home sales and crude oil inventories. Meanwhile, Fed Chairman Ben Bernanke is to testify on monetary policy before the Senate Banking Committee for a second day, in Washington DC.
Thursday, February 28
The U.S. is to release revised data on fourth quarter economic growth, in addition to the weekly government report on initial jobless claims and official data on manufacturing activity in Chicago.
Friday, March 1
The U.K. is to release industry data on house price inflation as well as a report on manufacturing activity and net lending to individuals.
The U.S. is to round up the week with a report from the Institute of Supply Management on manufacturing activity, official data on personal spending and revised data on consumer sentiment from the University of Michigan.
Fed Chairman Ben Bernanke is to speak in San Francisco; his comments will be closely watched for indications on the future possible direction of monetary policy.
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