British Pound: Bullish bias with data risk ahead against US Dollar – Scotiabank

The Scotiabank strategists, Shaun Osborne and Eric Theoret, have pointed out that the British Pound (GBP) is currently underperforming its core European counterparts but has managed to reach a three-month high against the US Dollar (USD). They perceive the market sentiment as cautious in the lead-up to a significant UK data calendar, which includes wage, job, Consumer Price Index (CPI), and Retail Sales data.

The short-term technicals for GBP/USD are considered bullish, with the potential to retest the May high of 1.3660 and support at 1.3530/50.

Sterling is slightly lagging behind its core European peers today, but the gains are still sufficient to push the pound to a three-month high against the USD. There are no substantial factors driving the pound's intraday performance. The markets seem somewhat cautious, anticipating the influx of UK data this week, such as wages, jobs, CPI, and Retail Sales figures.

Bullish indicators, such as minor new highs for Cable above the July peak and strong underlying trend momentum, suggest that GBP gains could continue, potentially pushing the pound to retest the May high at 1.3660. The short-term support level is identified at 1.3530/50.

The GBP/USD pair has added to its Friday advance and reached fresh three-month tops around 1.3570 on Monday. The fading expectations of a Federal Reserve (Fed) rate hike in September are benefiting the Greenback, allowing Cable to maintain its bullish momentum ahead of the key UK data releases this week. Meanwhile, EUR/USD experiences a modest retreat, but its bid bias remains intact around the 1.1600 region, marking an auspicious start to the week.

As investors adjust their expectations for the Fed's rate hikes following a series of disappointing US data releases, gold continues to gain ground for the second consecutive day, surpassing the $4,400 mark per troy ounce at the beginning of the week. The precious metal's recovery is attributed to the hawkish stance in the US Dollar and dwindling expectations of further tightening by the Fed in the coming months.

Bitcoin (BTC) also sees a slight increase, settling around $63,500 on Monday, following a minor correction the previous week. This upward movement is supported by improving risk sentiment and despite mild outflows from institutional demand.