GBP is extending recent gains - Scotiabank

Pound Sterling (GBP) is up a modest 0.2% against the US Dollar (USD), outperforming most of the G10 currencies as it pushes toward last week's multi-year high, Scotiabank's Chief FX Strategist Shaun Osborne notes.

GBP is threatening fresh multi-year highs

"Domestic releases have been of secondary importance, with a modest (but still contractionary) surprise in the construction PMI and slightly softer inflation expectations figures. UK-US spreads have widened modestly since mid-May, offering the pound critical fundamental support."

"Commentary from the BoE has leaned toward a cautiously neutral stance, with policymakers leaning toward leaving rates unchanged - for now - while signaling a willingness to provide additional easing if needed. The BoE's next meeting is on June 19 and markets are pricing a hold."

"Expectations for medium-term easing are also fading, and markets have pared back nearly 20bpts of easing by December and are now only expecting 43bpts into year-end."