GBP/USD: Data lift but range still dominant – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret note the Pound (GBP) is marginally softer versus the US Dollar (USD) but outperforming most G10 currencies, supported by better‑than‑expected United Kingdom (UK) Purchasing Managers' Index (PMI) data. Markets have raised Bank of England (BoE) hike expectations for June and September, though no move is seen at the upcoming meeting. Technically, GBP/USD shows modestly bullish momentum within a 1.3450–1.3550 range.

BoE expectations rise as PMIs surprise

"Fundamental releases were mixed with slightly greater than expected public borrowing and weaker CBI sentiment however the markets appear to be celebrating the better than expected preliminary PMI’s with both manufacturing and services printing above expectations around the 50 threshold to levels indicating modest expansion."

"The data have delivered a meaningful boost to BoE rate expectations, with markets currently pricing 20bpts for June and a cumulative 50bpts by September – but no chance of a hike next Thursday."

"Bullish/neutral – the RSI remains in the mid-50s, offering modestly bullish momentum despite a modest fade from recent peaks in the low 60s."

"The 1.35 level appears to be offering important near-term congestion, around the midpoint of the range from January. We look to a near-term range bound between 1.3450 and 1.3550."

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