Forex - GBP/USD weekly outlook: July 15 - 19

The dollar was higher against the pound on Friday, as the greenback recovered following a selloff earlier in the week after Federal Reserve Chairman Ben Bernanke said the U.S. economy still required monetary stimulus.

GBP/USD hit session lows of 1.5076 before settling at 1.5107, down 0.51% for the day, paring back the week’s gains to 1.61%.

Cable is likely to find support at 1.4996, Thursday’s low and resistance at 1.5220, Thursday’s high.

The dollar fell sharply on Wednesday after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future, citing low levels of inflation and the high unemployment rate.

Bernanke said the bank will not raise interest rates until the U.S. unemployment rate hits 6.5%.

The comments came after the minutes of the central bank’s June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program.

Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while many others believe the labor market still remains too weak.

Data on Friday showed that U.S. consumer sentiment ticked lower in July, with the University of Michigan’s consumer sentiment index slipping to 83.9 from 84.1 in June, compared to expectations for a reading of 85.0.

Meanwhile, Philadelphia Fed President Charles Plosser said Friday the U.S. central bank should wind down its monetary stimulus program by the end of this year. Elsewhere, St. Louis Fed President James Bullard said the bank should not start tapering asset purchases if inflation remains weak.

Sterling fell to three-year lows against the dollar early in the week after the Bank of England indicated at its July meeting that interest rates are likely to remain at record low levels, given weakness in the U.K.’s economic recovery.

In the week ahead, investors will be looking ahead to U.S. data on retail sales, consumer inflation and housing sector activity. U.K. data on unemployment 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, July 15

The U.S. is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish the Empire state manufacturing index and a report on business inventories.

Tuesday, July 16

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 official data on consumer price inflation, industrial production and the capacity utilization rate.

Wednesday, July 17

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

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 Federal Reserve is to release its Beige book.

Thursday, July 18

The U.K. is to publish government data on retail sales.

The U.S. is to release the weekly government report on initial jobless claims and the Philly Fed manufacturing index.

Friday, July 19

The U.K. is to round up the week with government data on public sector net borrowing.