GBP is underperforming due to PMI disappointment – Scotiabank

The Pound Sterling (GBP) is weak, down 0.3% against the US Dollar (USD) and underperforming most of the G10 currencies with the exception of CHF, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets focus on BoE

"Disappointing preliminary PMI’s are weighing on the pound, specifically the softer services PMI (51.2 vs. 52.9 exp. & 52.8 prev.) as the manufacturing release offered a modest surprise (48.2 vs. 48.0 exp. & 47.7 prev.). The CBI sentiment figures were in line with expectations and market participants will be looking to Friday’s retail sales as the highlight of the week."

"None of these data releases are likely to change the BoE’s thinking ahead of the August 7 policy decision, where the central bank is set to deliver a widely expected hold. The outlook remains dovish, with markets roughly pricing one additional 25bpt cut by year end."

"The multi-month bull trend once again looks to be faltering. The RSI is close to neutral at 50 and the latest pullback has found near-term support around the 50 day MA (1.3529). We look to a near-term range bound between 1.3500 support and 1.3580 resistance."