GBP ignores soft retail sales and rates markets steady following BoE - Scotiabank

Pound Sterling (GBP) is up a modest 0.2% vs. the US Dollar (USD) and outperforming nearly all of the G10 currencies in an environment of mild USD weakness, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Trend for GBP/USD remains bullish

"Weaker domestic retail sales data have dampened some of the pound's early Asian session gains, however the price action remains supportive into Friday's NA open. The broader market's tone remains an important driver as participants look to a near-term easing in geopolitical tensions."

"The relief is helping the pound to recover a portion of this week's pullback from its recent multi-year highs. BoE rate expectations have remained steady, and markets appear to be finding reassurance from the latest hold decision rather than the unexpected addition of a dove to the MPC's voting ranks."

"The trend for GBP/USD remains bullish, given the clear sequence of higher lows and higher highs from mid-January. However, the softening in momentum is somewhat concerning as we note the RSI's drift lower toward 50. The 50 day MA (1.3398) has been confirmed as an important level of medium-term support. In terms of near-term price action, we look to support at 1.3400 and see limited resistance ahead of 1.3550."