GBP Steady Against USD, Outperforming G10 Crosses – Scotiabank
The British Pound (GBP) is down slightly by 0.1% against the US Dollar (USD) but is showing relative strength against most G10 currencies, according to Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.
Key Drivers for GBP:
- Fiscal Focus: Market participants are primarily focused on fiscal developments, particularly the upcoming November 26 budget release. Recent improvements in interest rate differentials have provided some fundamental support for the GBP.
- Upcoming UK Data: Near-term domestic risk events include the CPI release on Wednesday, followed by retail sales and preliminary PMIs on Friday.
- BoE Expectations: The short-term rates market is pricing in approximately 20 basis points (bpts) of easing for the Bank of England’s (BoE) December meeting, with a full 50 bpts expected by June. This reflects the BoE’s recent communication and its focus on the softening UK labor market.
Technical Outlook: The Relative Strength Index (RSI) shows a marginally bearish bias in the low 40s but is well above early November’s oversold levels. The GBP’s recovery appears to have paused near resistance just under 1.32. Near-term support is observed around 1.3080.
