Forex - GBP/USD weekly outlook: May 23-27

Investing.com – Last week saw the pound close trading largely unchanged against the U.S. dollar, as stronger-than-expected U.K. data did little to boost expectations that the Bank of England will raise interest rates this year.

GBP/USD hit 1.6304 on Friday, the pair’s highest since May 13; the pair subsequently consolidated at 1.6228 by close of trade, easing up just 0.12% over the week.

Cable is likely to find support at 1.6105, Wednesday’s low and a six-week low and resistance at 1.6304, Friday’s high.

Official data on Tuesday showed that the annual rate of inflation in the U.K. hit a two-and-a-half-year high of 4.5% in April, more than forecasts for a 4.2% reading.

On Thursday, government data showed that British retail sales for April rose 1.1%, outstripping expectations for a rise of 0.8%, boosted by the extra holiday for the Royal Wedding and record high temperatures.

But BOE Governor Mervyn King warned that a rate hike in the near term could threaten the fragile economic recovery.

The pound came under pressure as risk appetite faltered on Friday after ratings agency Fitch downgraded Greece's credit ratings by three notches and said a “soft” restructuring of the country’s debt by European Union policy makers would be considered a default.

Meanwhile, data on Thursday showing a slowdown in manufacturing growth in the U.S. Mid-Atlantic region and an unexpected dip in existing home sales in April supported the view that the Federal Reserve is unlikely to tighten policy for some time to come.

Looking ahead to the coming week, U.S. data on durable goods and a second look at first quarter gross domestic product will be the main focus of attention. The U.K. is also to publish revised data on first quarter GDP.

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, May 24

The U.K. is to publish official data on public sector net borrowing, as well as an industry report on realized sales, a leading indicator of consumer spending.

The U.S. is to publish government data on new home sales, a leading indicator of economic health.

Wednesday, May 25

The U.K. is to release revised data on first quarter GDP, the broadest measure of economic activity and the primary gauge of the economy's health. The country is also to publish industry data on mortgage approvals and preliminary business investment.

The U.S. is to publish official data on durable goods orders, a leading indicator of production, as well as a government report on crude oil stockpiles.

Thursday, May 26

The U.S. is to publish revised data on first quarter GDP, the broadest measure of economic growth. The U.S. is also to publish its weekly report on initial jobless claims.

Friday, May 27

In the U.K., research group Gfk is to publish a report on consumer confidence, while later in the day mortgage lender Nationwide is to publish a report on house prices, a leading indicator of the housing industry's health.

The U.S. is to round up the week with a slew of economic data, including government reports on personal income and spending and industry data on pending home sales, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.