Forex - GBP/USD weekly outlook: July 22 - 26

The pound rose to two-week highs against the dollar in subdued trade on Friday but gains were limited as expectations that the Federal Reserve will start to unwind its bond buying later this year remained intact.

GBP/USD hit highs of 1.5281, the highest since July 4, before settling at 1.5268, 0.29% higher for the day and extending the week’s gains to 1.15%.

Cable is likely to find support at 1.5156, Thursday’s low and resistance at 1.5345, the high of June 27.

Demand for the dollar continued to be underpinned after Federal Reserve Chairman Ben Bernanke indicated Wednesday that the bank still expects to start tapering its asset purchase program by the end of the year.

In the first day of his semi-annual testimony to Congress Bernanke said the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”

Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future.

Earlier Wednesday, the minutes of the Bank of England’s July meeting showed that policymakers voted unanimously to keep the bank’s quantitative easing program unchanged, ahead of a decision next month on whether to provide forward guidance on future interest rates.

Two policymakers who had previously voted in favor of more stimulus said it remained "warranted".

Meanwhile, official data showed that the number of people claiming unemployment benefits in the U.K. fell by a seasonally adjusted 21,200 in June, better than expectations for a decline of 8,000. 

The U.K. unemployment rate held steady at 7.8% in May.

In the week ahead, the U.S. is to publish data on the housing sector and manufacturing. The U.K. is to release what will be closely watched data on second quarter economic growth.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, July 22

The U.S. is to publish private sector data on existing home sales, an important economic indicator.

Tuesday, July 23

The U.K. is to release a report on mortgage approvals, an important indicator of demand in the housing sector.

Wednesday, July 24

The U.K. is to print private sector data on industrial order expectations, an important economic indicator.

Later Wednesday, the U.S. is to release official data on new home sales, a leading indicator of economic health.

Thursday, July 25

The U.K. is to publish preliminary data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

The U.S. is to publish government data on durable goods orders, a leading indicator of production, as well as the weekly government report on initial jobless claims.

Friday, July 26

The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan.