British Pound: Range-bound against US Dollar with steady BoE expectations – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD near 1.3338 is steady versus the US Dollar (USD) and outperforming on crosses despite weak construction Purchasing Managers' Index (PMI) data. The data calendar and Bank of England (BoE) speeches are limited, while rate expectations have stabilized and the curve has un-inverted. Markets see little change at the July and September meetings, pricing modest tightening by November and December, with spot seen in a 1.3300–1.3400 range.

Pound steady in tight range

"The pound is steady, entering Monday’s NA session unchanged vs. the USD while outperforming most of the G10 currencies on the crosses."

"Fundamental releases have been limited to third-tier construction PMI data, disappointing with a deeply contractionary print of 38.4 – a marginal rise from the prior month’s multi-year low of 38.2."

"This week’s data calendar is thin and BoE speaking engagements are sparse. BoE rate expectations stabilized over the past week or so, and have also un-inverted in a manner similar to the ECB’s. Markets are pricing little change for either of the next two (July 30, Sept 17) meetings, with 12bpts of tightening for November and 17bpts by December."

"Neutral – the RSI has recovered back to the neutral threshold around 50, reflecting the recovery in spot from the mid-1.31s to the upper 1.33s. We see potential near-term resistance around 1.34, a level that roughly corresponds to both the 50 and 200 day MA’s. We look to a near-term range bound between 1.3300 and 1.3400."

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