GBP/USD: Data-heavy week with political risks – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report the Pound (GBP) is steady versus the US Dollar (USD) after recovering from an initial reaction to renewed US–Iran tensions. A busy United Kingdom (UK) data calendar includes jobs, Consumer Price Index (CPI) , Purchasing Managers' Index (PMI) and retail sales, while markets reassess risks around PM Starmer and fiscal prudence. Technically, GBP/USD is seen range-bound between 1.3480 and 1.3580 with support in the mid-to-lower 1.34s.

Stable pound within defined range

"The pound is also steady and entering Monday’s NA session unchanged vs. the USD, and also recovery from a short-lived knee-jerk open reaction to the latest resurgence in tensions between the US and Iran."

"Domestic political developments are also staging a comeback as market participants assess the possibility of PM Starmer resigning and consider the implications for UK fiscal prudence."

"In terms of the BoE, comments from policymakers have offered very little in terms of guidance, framing a wide range of possible rate paths."

"GBP/USD short-term technicals: Bullish/neutral – as with EUR, the GBP’s RSI has also flattened out in modestly bullish territory with a pair of offsetting doji candles that also hints to a mixed and conflicted chart."

"We look to potential support in the mid/ lower-1.34s around the clustered 50 and 200 day MA’s and look to a near-term range bound between 1.3480 and 1.3580."

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