GBP consolidating recent gains – Scotiabank

The Pound Sterling (GBP) is steady, entering Monday’s NA session flat vs. the USD as it consolidates last week’s gains, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets fade expectations for BoE cuts

"The outlook for relative central bank policy is supportive of GBP strength as markets fade their expectations for BoE easing while building in a lower rate path for the Fed. The shift in fundamentals is also being confirmed by sentiment, with a notable turn in risk reversals that suggest a moderation in the premium for protection against GBP weakness."

"This week’s domestic calendar is heavy, with employment data scheduled for Tuesday and Q2 GDP, industrial production, and trade figures scheduled for Friday. Recent gains have lifted the RSI back to neutral (~50), suggesting little in terms of momentum."

"GBP/USD has recovered back to just below its 50 day MA (1.3503), a level that had offered support through the Jan -July bull run. We see little resistance ahead of the upper 1.35 area and look to nearterm support below 1.3380."