Forex - GBP/USD weekly outlook: September 24 - 28

Forexpros - The pound retreated from a 13-month high against the U.S. dollar on Friday, to end the week almost unchanged against the greenback, as uncertainty over the global outlook and the prospects for a Spanish bailout dented risk appetite. GBP/USD hit 1.6308 on Friday, the pair’s highest since August 31, 2011; the pair subsequently consolidated at 1.6226 by close of trade, dipping 0.04% on the week. Cable was likely to find support at 1.6121, Thursday’s low and resistance at 1.6308, Friday’s high. The pound touched a 13-month high against the greenback on Friday as demand for higher yielding assets was supported by speculation that Spain was moving closer to requesting a full-scale sovereign bailout. Risk appetite was bolstered by reports that Madrid is considering speeding up a planned rise in the retirement age and is looking at freezing pensions as it attempts to cut spending. Spain saw borrowing costs fall at an auction of government debt on Thursday, after the European Central Bank pledged earlier this month to buy unlimited amounts of short term government bonds from troubled euro zone members, but only after they request assistance. However, expectations that Madrid will seek a bailout were dented after Germany’s Finance Minister Wolfgang Schaeuble said Friday that Spain did not need a sovereign bailout on top of the package already agreed for its banks because it was on the right path to regain the confidence of markets. In the U.K., official data on Friday showed that the U.K. budget deficit rose to the largest on record for any August last month. The data came after Bank of England minutes on Wednesday showed some policymakers felt the economy may need more stimulus, indicating that the central bank may extend its GBP375 billion asset buying scheme. Sterling fell against the greenback on Thursday after data from China showed that the country’s manufacturing sector remained in contraction territory for the eleventh consecutive month in September, underlining concerns over a slowdown in the world’s second largest economy. Elsewhere, data showed that the euro zone’s services sector contracted at the fastest pace since July 2009 in September, while the manufacturing sector also contracted, albeit at a slower than forecast pace. In the week ahead, investors will continue to eye developments in Spain, while U.S. data on consumer sentiment and spending will be closely watched as investors attempt to gauge the strength of the U.S. economy. Ahead of the coming week, Forexpros 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, September 25 The U.K. is to produce industry data on mortgage approvals, an important indicator of demand in the housing sector. The U.S. is to publish data on consumer confidence, a leading indicator of economic health, as well as industry data on house price inflation. Wednesday, September 26 The U.K. is to produce industry data on retail sales, an important indicator of economic health, while the Bank of England is to publish a quarterly review of credit conditions. Later Wednesday, the U.S. is to publish official data on new home sales, a leading indicator of the health of the housing sector, as well as government data on crude oil stockpiles. Thursday, September 27 The U.K. is to release official data on the current account, as well as final data on second quarter economic growth, a leading indicator of economic health. The U.S. is to publish government data on durable goods orders, a leading indicator of production, as well as a weekly report on unemployment claims and revised data on second quarter economic growth. The country is also to produce industry data on pending homes sales, a leading indicator of economic health. Friday, September 28 The U.S. is to round up the week with official data on personal income and spending, as well as data on personal consumption expenditures and an index of business activity in the Chicago area. In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.