Investing.com - The pound was lower against the broadly stronger dollar on Friday after U.S. housing data topped expectations, adding to optimism that the economic recovery in the U.S. is gaining traction.
GBP/USD ended Friday’s session at 1.6828, down 0.25% for the day.
Cable is likely to find support at 1.6770 and resistance at 1.6920, Wednesday’s high.
The dollar was boosted after the Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of declines.
Analysts had been expecting a figure of 425,000. March''s number was revised up from 384,000 to 407,000.
Elsewhere, sterling rose to its highest level in 17 months against the euro after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.
EUR/GBP touched lows of 0.8082, the lowest since December 2012 before pulling back to 0.8099 at the close, ending the week 0.69% lower.
The drop in the euro came after a report showed that the German Ifo business climate index declined to 110.4 in May; the lowest reading this year, from 111.2 in April, indicating that economic activity could slow in coming months.
The data came one day after a report showing that manufacturing activity in the euro zone expanded at the slowest rate in six months in May.
Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.
On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.
Demand for the pound was underpinned after Wednesday’s minutes of the Bank of England’s May meeting indicated that some policymakers believe the decision on when to raise rates is "becoming more balanced," indicating that they are becoming more hawkish about the argument for hiking interest rates.
Sterling received an additional boost after data on Wednesday showing that U.K. retail sales jumped in April bolstered the outlook for the broader recovery.
Retail sales jumped 1.3% in April, the Office of National Statistics said, more than double forecasts for a 0.5% increase, driven by higher food sales over the Easter holiday.
In the coming week, markets in the U.K. will be closed for a public holiday on Monday, while U.S. markets will also be closed for the Memorial Day holiday. Investors will be looking ahead to revised data on U.S. first quarter growth, while the U.K. is not scheduled to release any major data.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 26
Markets in the U.K. are to remain closed for a public holiday, while U.S. markets will also be closed, for the Memorial Day holiday.
Tuesday, May 27
The U.K. is to publish a private sector report on mortgage approvals.
The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.
Wednesday, May 28
The U.K. is to publish private sector data on retail sales.
Thursday, May 29
The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.
Friday, May 30
The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.