British Pound: Limited upside after hawkish BoE hold – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the British Pound (GBP) is only marginally firmer versus the US Dollar (USD) despite stronger-than-expected August retail sales.
Scotiabank strategists Shaun Osborne and Eric Theoret indicate the British Pound (GBP) has only modestly improved against the US Dollar (USD), despite retail sales data in August surpassing expectations. They suggest the recent hawkish stance from the Bank of England (BoE) may limit near-term gains for the GBP, even as UK political support from the government's fiscal policies remains positive.
The technical analysis shows the GBP/USD must stay above the mid/lower 1.33 range to maintain its upward trend. The GBP was marginally stronger on Friday, yet did not capitalize on the stronger-than-expected retail sales data. The release of this data came shortly after the BoE's hawkish decision, which might have constrained potential gains for the GBP.
Market sentiment remains supportive politically, with confidence in the government's dedication to fiscal responsibility. Technical indicators, including the Relative Strength Index (RSI), indicate a bearish trend, with the RSI reaching an oversold level of 30. In the medium term, analysts anticipate the GBP to stay above the 1.33 mark to sustain ascending support.
The near-term support level is forecasted around 1.3320, with limited resistance anticipated before 1.3480.
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