Forex - GBP/USD weekly outlook: March 11 - 15

The pound fell to fresh two-and-a-half-year lows against the dollar on Friday as stronger-than-forecast U.S. employment data fuelled hopes that the country’s economic recovery is gaining traction.

GBP/USD hit 1.4887, the pair’s lowest since July 1, before settling at 1.4912, down 0.69% for the day and 1.46% lower for the week.

Cable is likely to find support at 1.4725 and resistance at 1.5046, Friday’s high.

The Department of Labor said the U.S. economy added 236,000 jobs last month, blowing past expectations for an increase of 160,000. The unemployment rate ticked down to 7.7%, the lowest level since December 2008, from 7.9% in January.

The robust data added to speculation over an earlier-than-expected end to the Federal Reserve’s easing program, bolstering demand for the dollar.

Sentiment on the pound remained weak amid concerns over the prospects for a triple-dip recession and the possibility of more easing by the Bank of England.

On Thursday, BoE policymakers voted to leave interest rates on hold at a record low 0.5% and keep the size of its asset purchase program unchanged at GBP375 billion.

Data on Tuesday showed that activity in the U.K. service sector rose to a five-month high in February, easing fears over a triple-dip recession.

However, concerns over the economic outlook for the U.K. persisted after data on Thursday showed that the U.K. construction sector contracted last month. The U.K.’s manufacturing sector also contracted unexpectedly in February.

The pound also ended the week lower against the euro, with EUR/GBPsettling at 0.8717, up 1.16% for the week.

In the week ahead, investors will be closely watching U.S. data on retail sales, industrial production and inflation to determine the strength of the economic recovery. Markets will also be eyeing U.K. data on manufacturing and industrial production.

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, March 12

The U.K. is to release official data on manufacturing and industrial production, leading economic indicators, as well as data on the trade balance, the difference in value between imports and exports.

Later in the day, the U.S. is to publish data on the federal budget balance.

Wednesday, March 13

The U.S. is to release government data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as official data on import prices, business inventories and crude oil stockpiles.

Thursday, March 14

The U.S. is to release government data on producer price inflation, the leading indicator of consumer inflation and the weekly government report on initial jobless claims.

Friday, March 15

The U.S. is to round up the week with official data on consumer inflation and preliminary data from the University of Michigan on consumer sentiment. The U.S. is also to release data on industrial production, the capacity utilization rate and manufacturing activity in New York state.