GBP/USD ended Friday’s session at 1.6012, down 0.51% for the day, after falling to session lows of 1.5958 earlier. For the week, the pair was up 0.26%.
The U.S. economy added 204,000 jobs in October, the Department of Labor said Friday, significantly higher than the 125,000 expected by economists. The unemployment rate ticked up to 7.3% from an almost five year low of 7.2% the previous month.
The robust data indicated that the U.S. economy shrugged off the impact of the government shutdown and fuelled expectations that the Fed may start to reduce its USD85 billion-a-month asset purchase program as soon as next month.
The report came one day after official data showed that the U.S. economy grew at an annual rate of 2.8% in the three months to September, well above expectations for growth of 2%.
In the U.K., data on Friday showed that the trade deficit widened to GBP9.82 billion in September from GBP9.55 billion in August. Economists had been expecting a trade deficit of GBP9.2 billion.
The report said that in the three months to September exports fell by 4.6% while imports rose 1.3%.
The weak trade data raised concerns that U.K. third quarter growth would be dragged down. Preliminary data released last month showed that the U.K. economy expanded by 0.8% in the third quarter.
Elsewhere, sterling ended the week sharply higher against the euro after the European Central Bank unexpectedly cut its benchmark interest rate to 0.25% from 0.5% on Thursday and indicated that further rate cuts are still possible.
Sentiment on the shared currency was also hit after ratings agency Standard & Poor’s cut France’s sovereign rating to AA from AA+ on Friday, warning that the economic reforms of the past year were not sufficient to lift growth.
EUR/GBP settled at 0.8346 on Friday, after falling to 10-month lows of 0.8299 in the previous session and ended the week 1.37% lower.
The Bank of England left interest rates on hold at 0.5% on Thursday and made no changes to the GBP375 billion quantitative easing stimulus program.
In the week ahead, investors will be closely watching Thursday’s Senate hearing to confirm Janet Yellen as the first chairwoman of the Federal Reserve. Meanwhile, the Bank of England is to publish its closely watched quarterly inflation report.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.
Tuesday, November 12
The U.K. is to produce data on consumer price inflation, which accounts for the majority of overall inflation.
Wednesday, November 13
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. Meanwhile, the BoE is to publish its closely watched quarterly inflation report and BoE Governor Mark Carney is to speak at a press conference to accompany the report.
Thursday, November 14
The U.K. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is to release official data on the trade balance, the difference in value between imports and exports and the weekly report on initial jobless claims.
Friday, November 15
The U.S. is to round up the week with data on manufacturing activity in the New York region, as well as reports on industrial production and import prices.
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