GBP gains offer retracement back toward recent multi-year high - Scotiabank

Pound Sterling (GBP) is also showing impressive strength with a 0.6% gain vs. the US Dollar (USD) and mid-performance among the G10, retracing a good portion of its latest pullback from last Monday's multi-year high, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Eyeing BoE speeches for continued rate support

"Second- and third-tier releases have included stronger than expected housing price data, softer money supply growth, and mixed lending data. The final manufacturing PMI surprised to the upside, at 46.4, however the level remains well short of the UK's European peers whose readings are much closer to the expansion/contraction threshold at 50."

"This week's BoE calendar is heavy and we'll be watching to see if the speakers maintain the latest neutral/ hawkish shift in tone. The recent fade in easing expectations has offered the pound some fundamental (rate) support with markets now pricing in only 37bpts of additional easing by December, a 20bpt reduction from early May."

"The medium-term trend is bullish and GBP remains well supported as it recovers its latest pullback from last Monday's multiyear high. The RSI is at 62, leaving ample room for further gains ahead of the overbought threshold at 70. Near-term resistance has been observed in the mid1.35s and we see no additional resistance ahead of the latest high just below 1.36. Near-term support is expected below 1.3450."