Investing.com

Investing.com - The pound ended Friday’s session lower against the dollar, as a broad based selloff in emerging markets bolstered safe haven demand for the greenback, sending sterling retreating from almost three year highs struck earlier in the day.



GBP/USD hit highs of 1.6668, the strongest level since May 2011 but ended the session down 0.94% at 1.6480. For the week, the pair gained 0.33%.



Cable is likely to find support at 1.6400 and resistance at 1.6668, Friday’s high.



The dollar strengthened against sterling as investors sold off stocks and emerging market currencies amid expectations that the Federal Reserve will continue to taper stimulus measures.



The Turkish lira fell to the latest in a series of record lows against the dollar on Friday, when a currency market intervention by Turkey’s central bank failed to halt the currency’s steep decline. South Africa’s rand, the Russian ruble and the Argentine peso fell to multi-year lows against the dollar.



Argentina''s central bank said Friday it was loosening strict foreign exchange rules, giving up its traditional policy of supporting the currency through interventions.



Emerging market currencies have been hard hit since the Fed announced plans last month to begin scaling back its asset purchase program, while worries over political instability and the outlook for growth for some countries also weighed.



Market sentiment was also hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.



Comments by Bank of England Governor Mark Carney also pressured the pound lower. Carney said it was time for the central bank to “evolve” its forward guidance on rates, because the unemployment rate has fallen far more quickly than the bank anticipated. The comments sparked concerns that the BoE may abandon the 7% unemployment threshold to consider an increase in interest rates.



The pound rallied after data earlier in the week showed that the U.K. unemployment rate dropped to 7.1% in the three months to November.



Carney said that even with falling unemployment, the U.K.''s economic recovery had yet to reach "escape velocity", adding that exceptional monetary policy is still relevant.



In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.



Data from the U.S. and the U.K. on fourth quarter growth will also be closely watched.



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



Monday, January 27



The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.



Tuesday, January 28



The U.K. is to release preliminary data on fourth quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.



The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.



Wednesday, January 29



The Federal Reserve is to announce its federal funds rate and publish its rate statement.



Thursday, January 30



The U.K. is to release data on net lending to individuals.



The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.



Friday, January 31



The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.



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