GBP hits fresh multi-year highs - Scotiabank

The Pound Sterling (GBP) is up 0.6% against the US Dollar (USD) and performing in line with its peers, responding to Fed developments that are weighing on the USD more broadly, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Momentum is confirming the fresh highs in spot

"These developments are lending the pound some fundamental support as softer US yields lift the GBP via UK-US spreads. domestically, rate expectations remain steady with markets still pricing roughly two 25bpt rate cuts by year end. In terms of data, the CBI retail sentiment figures showed a meaningful deterioration (and disappointment)."

"The trend is bullish and momentum is confirming the fresh highs in spot. The RSI is at 66, still shy of the overbought threshold that marked its recent peaks in March and April. GBPUSD has reached the anticipated resistance level at 1.3750, offering a possible near-term reprieve."

"We see no major resistance ahead of the psychologically important 1.40 level and continue to highlight the importance of medium-term support at the 50 day MA (1.3430). Near-term support is expected closer to 1.3600."