British Pound: Consolidation against US Dollar before UK data and BoE – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is little changed as it extends its recovery from last week’s lows, with risk set to rise on upcoming United Kingdom (UK) trade and industrial data. They expect a hawkish hold from the Bank of England (BoE) next week, with markets already pricing tightening by November. Technically, Sterling is capped in the mid-1.35s but supported in the upper-1.34s within an ascending channel.

Pound steady as BoE risks build

"he domestic release and event calendar has been relatively empty this week, however risk picks up on Friday as markets assess the latest trade and industrial production data."

"Next week’s jobs and CPI figures offer additional risk into Thursday’s BoE, where policymakers are widely expected to deliver a hawkish hold. Next week’s BoE is a nonMPR (forecast) meeting, leaving the November 5th rate decision as the next likely meeting for a 25bpt rate hike—with short-term rates markets already pricing ~19bpts of tightening for the decision."

"Fiscal concerns remain front and center in terms of sentiment, as we continue to highlight the importance of the budget scheduled for late October—the trend in sentiment remains constructive for the GBP. "

"Support has been observed in the upper-1.34s. As such, we await a break of the tight short-term range but continue to feel that medium-term risks lean bullish given the clear ascending trend channel from late June."

"Neutral—the RSI remains close to neutral and is hovering just above the 50 threshold. This week’s price action has revealed a clear struggle to extend much above resistance in the mid-1.35s, limiting the near-term risk of a push back toward the local high around 1.3650."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)