The pound still remained close to its five year high against the dollar last week, as disappointing U.S. trade balance weighed on demand for the greenback, while a strong U.K. service sector report a persisted support of the sterling.
The GBP/USD was able to hit 1.6995 during the U.S. morning trade, the pairs peak since August 2009; the pair consequently consolidated at 1.6994, climbing nearly 0.75 %. Cable was likewise able to find support at 1.6866, a session low and resistance at 1.7042.
Official data revealed that the U.S. trade deficit tapered to $40.38 billion in March, from $41.87 billion in February, whose figures were adjusted from a previously estimated deficit of $42.30 billion. Analyst had predicted the trade deficit to further taper at $40.30 billion.
The demand for sterling strengthened following the services purchases of the U.K. managers’ index rising to a four-month high of 58.7 last month from a reading of 57.6 a month prior with analysts speculating the index to further remain unchanged in April.
The upbeat data added further expectations to the Bank of England which could raise the borrowing cost ahead of other central banks. Moreover, sterling was also seen to surpass the euro, with EUR/GBP shedding 0.33 % to 0.8199.
In the Eurozone, official data revealed that the retail sales incrementally rose 0.3 % in March, with puzzling expectations for a 0.2 % fall. Retail sales in February were also narrowed down to a 0.1 % gain from a previously estimated 0.4 % increase.
The report came following official date that the number of unemployed people in Spain plummeted by 111,600 compared to the predicted decline of 49, 100 after a 16, 600 fall of the prior month. Discretely, an independent research group in one of its surveys reveal that Spain’s services PMI rose to a six-year high of 56.5 last month from a reading of 54.0 last March. Analysts had expected the index to tick 54.4 during the previous month.
Finally, Italy’s services PMI was able to swing back into expansion territory during the previous month, peaking 51.1 from a reading of 49.5 in March surpassing expectations from an uptick 50.4.