The pound declined against the US dollar on Friday, after UK manufacturing production data disappointed. Meanwhile, investors awaited the release of US non-farm payrolls later in the day.
Having reached a session low at 1.6402 at 10:14 GMT, GBP/USD traded at 1.6413 at 10:32 GMT, losing 0.41% on a daily basis. Support was likely to be received at January 8th low, 1.6377, while resistance was to be encountered at January 9th high, 1.6498.
The pound was pressured after the UK National Statistics Bureau released a report that showed UK manufacturing production was flat in November, while analysts had expected a 0.4% increase. The manufacturing production was downwardly revised from 0.4% to 0.2% in October.
The Monetary Policy Committee of BoE decided yesterday to keep its key interest rate at a record low 0.5% and to leave the amount of 375 billion pounds in monthly bond purchases unchanged, which was largely anticipated by analysts.
According to a report by Goldman Sachs Group Inc., cited by Bloomberg, the fastest growth since 2010 may translate into unemployment declining to the target level of 7%, at which the BoE will review its policy as early as June.
Mark Carney became a governor of BoE in July, and a month later announced his strategy to keep borrowing costs low until the unemployment falls to 7%. BoE may be urged to change the unemployment threshold as the economy improves, diminishing confidence in the program, designed to bolster UK economic recovery.
The UK National Statistics reported the nation’s trade deficit narrowed to 9.44 billion pounds from a downwardly revised 9.65 billion pounds in October. Analysts had projected that the trade deficit will narrow to 9.45 billion.
The report revealed the UK exports to the EU increased to 12.75 billion in November, reaching the highest level since August.
Meanwhile, later in the day, a report by the US Labor Department may reveal employers added more jobs in 2013 than in the past eight years. According to the median analysts’ forecast, US employers hired 197 000 workers last month, down from 203 000 in November, but this would bring a total of 2.27 million workers for last year, the most since 2005.
On January 8th, a report by the ADP research institute showed the US private sector added 238 000 workers in December, the most since November 2012, defying analysts’ projections of a decrease to 200 000 from 215 000 workers in November. The ADP report is calculated according to the same methods the Bureau of Labor Statistics uses and is published every month, two days before the official BLS employment rate statistics.
The Federal Reserve Bank said on December 18th that it will reduce its monthly bond purchases in January to $75 billion from $85 billion, citing improvements in the labor market. Yesterday, Fed minutes of the December meeting revealed decreasing economic benefits from the bond-buying program, which increased bets that Fed policy makers might extend reductions in their monetary stimulus program in the near future.
The dollar was supported by a recent series of upbeat US economic data.
On Tuesday, the US Commerce Department reported that the US trade deficit narrowed to $34.25 billion in November, defying analysts’ projections that the trade deficit will widen to $40.00 billion. In October the US trade deficit was downwardly revised from $40.64 to $39.33 billion.
Data showed that the US imports declined 1.4% to $229.1 billion, while exports rose 0.9% to a record high $194.9 billion.
On Thursday, the US Labor department reported the initial jobless claims for the week ended January 4th decreased to 330 000 from 345 000 in the previous week. Analysts had expected the number of people who file for unemployment benefits will decrease to 335 000 people.
According to the median estimate of economists surveyed by Bloomberg on December 19th, the Federal Reserve may reduce the purchases in $10 billion increments over the next seven meetings, before ending the program, which tends to devalue the US dollar, in December 2014.
Elsewhere, having reached a session high at 1.3620 at 06:25 GMT, EUR/USD traded little changed at 1.3603 at 09:09 GMT, losing 0.04% for the day. Support was likely to be received at January 9th low, 1.3549, also the pair’s lowest since December 5th, while resistance was to be met at January 9th high, 1.3633.
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