GBP pulls back as markets digest BoE hold - Scotiabank

Pound Sterling (GBP) is soft and trading defensively into Thursday's NA session with markets unphased by the BoE's as-expected hold at 4.25% but offering some reaction to a 7-3 hold-cut split, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets are digesting BoE hold and unexpected 7-3 hold-cut vote

"Recent voting at the BoE has been mixed, with the prior meeting offering a 2-5-2 hike-hold-cut distribution as policymakers weighed the uncertainties posed by tariffs. A return to a neutral/dovish bias was expected, however we think it important to note that the latest addition to 'team cut' is the BoE's Chief Economist Huw Pill."

"We remain medium-term GBP bulls, primarily on the basis of Fed-driven USD weakness rather than GBP strength. GBP/USD has not had any followthrough in the aftermath of Tuesday's sizeable decline."

"The multi-month trend is intact, for now, as GBP/USD tests the important medium-term 50 day MA (1.3390) support level. A break from here would call for a more decisive call in the trend shift. The latest pair of doji candles signals uncertainty, and we expect the near-term range to be defined by support below 1.3380 and resistance above 1.3480."