Forex - GBP/USD weekly outlook: June 17 - 21

Investing.com - The pound ended the week close to four-month highs against the dollar on Friday as fears over the future of Federal Reserve stimulus measures weighed on the dollar.

GBP/USD hit 1.5736 on Thursday, the pair’s highest since February 11; the pair subsequently consolidated at 1.5702 at close of trade on Friday, 1.2% higher for the week.

Cable is likely to find support at 1.5615, Friday’s low and resistance at 1.5809, the high of February 11.

The dollar weakened against the other major currencies amid growing expectations that the Federal Reserve will begin to taper its USD85 billion-a-month bond purchasing program later this year.

The dollar found some support after a series of weaker-than-expected U.S. economic data releases on Friday raised concerns over the outlook for the economic recovery ahead of this week’s upcoming Federal Reserve policy meeting.

Data showed that the University of Michigan’s consumer sentiment index fell unexpectedly in the current month after rising to the highest level in almost six years in May.

Separate reports showed that U.S. industrial production was flat in May, while the capacity utilization rate fell unexpectedly last month.

Sterling remained supported after upbeat U.K. employment data on Wednesday bolstered optimism over the outlook for second quarter economic growth.

The claimant count in the U.K. fell by a seasonally adjusted 8,600 in May, better than expectations for a decline of 5,000 people.

The ONS said the unemployment rate remained steady at 7.8% in April, in line with expectations.

The data added to optimism over the economic recovery in the U.K. after data earlier this month showed that service sector activity expanded at the fastest rate since March 2012 in May.

In the coming week, markets will be focusing on Wednesday’s Federal Reserve policy meeting, as investors look to Fed Chairman Ben Bernanke for any indication on when the U.S. central bank may start to unwind its easing policies.

Elsewhere, the Bank of England is to release the minutes of its latest policy meeting.

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

Monday, June 17

The U.S. is to publish the Empire state manufacturing index.

Also Monday, finance ministers and central bankers from the G8 group are to hold the first day of a two day summit in Northern Ireland.

Tuesday, June 18

The U.K. is to release official data on consumer price inflation, which accounts for the majority of overall inflation. Meanwhile, BoE policymakers are to testify on the inflationary and economic outlook before the U.K. Treasury Committee.

The U.S. is to release official data on building permits, housing starts and consumer price inflation.

Meanwhile, finance ministers and central bankers from the G8 group are to hold the second day of a two day summit in Northern Ireland.

Wednesday, June 19

The BoE is to release the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.

Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The statement is to be followed by a closely watched press conference with Chairman Ben Bernanke. The U.S. central bank is also to release its quarterly report on economic and inflation projections.

Thursday, June 20

The U.K. is to release official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as private sector data on industrial order expectations.

The U.S. is to release the weekly government report on initial jobless claims, in addition to data on existing home sales and the Philly Fed manufacturing index.

Friday, June 21

The U.K. is to release official data on public sector net borrowing.