British Pound: Supportive BoE outlook with range trade against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret describe GBP/USD as slightly softer but supported by expectations of further Bank of England (BoE) tightening into year-end. With limited data before Friday’s trade and industrial production releases, markets price incremental hikes for November and December. They highlight a bullish medium-term trend, yet see the pair constrained in a near-term 1.3500–1.3600 range as traders watch fiscal risks into the Autumn Statement.

Pound supported but range bound

"As with EUR and the ECB, the outlook for relative central bank policy remains supportive for the pound, given expectations for tightening into year-end."

"The September 17 meeting offers little, however short term rates markets are currently pricing in 16bpts of tightening for November 5th, and just over 30bpts for December 17th."

"Political developments have been limited and we continue to highlight the risk of sentiment-related movement tied to fiscal risks into the Autumn Statement (budget) scheduled for late October."

"The medium-term trend is bullish, with a clear sequence of higher lows and higher highs since late June."

"We look to a near-term range bound between 1.3500 and 1.3600."