GBP weak, underperforming with pro-risk currencies – Scotiabank

The Pound Sterling (GBP) is weak, down 0.6% against the US Dollar (USD) and underperforming most of the G10 currencies in an environment of broad-based USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Focus on fiscal news and BoE

"Fiscal developments are dominating in the absence of economic data releases, and focus is on Chancellor Reeves and her attempts to adhere to self-imposed fiscal rules deemed necessary to maintain the confidence of markets. The budget is still weeks away (November 26) but market participants and government officials remain fixated on the Chancellor’s plans."

"The GBP’s correlation to spreads is elevated, suggesting a strong relationship to fundamentals at the moment—a key risk for the pound heading into this Thursday’s BoE (exp hold w/ ~8bpts of easing priced in)."

"The RSI is below the oversold threshold at 30 and now into deeply oversold territory at levels (mid-25s) that rarely hold. There appear to be no major support levels ahead of the psychologically important levels ahead of 1.30 and we look to a near-term range bound between 1.3020 and 1.3120."