GBP soft as markets look to BoE guidance - Scotiabank

The Pound Sterling (GBP) is soft and entering Monday's NA session with a marginal 0.1% decline against the US Dollar (USD), trading just below last week's multi-year highs, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP is soft as markets price BoE cuts

"The UK's final Q1 GDP release was in line with expectations at 0.7% q/q and 1.3% y/y. Domestic lending figures for May were soft. We look to headline risk from the ECB's Sintra forum as markets will look for possible insights into the BoE's policy outlook. Markets are pricing roughly 21bpts of easing for the August meeting and over 50bpts by year end."

"The technical outlook is bullish with a clear sequence of higher lows and higher highs. Last week's rally pushed GBP/USD to fresh multi-year highs and the momentum indicators are bullish with an RSI at 64. We see limited resistance ahead of the psychologically important 1.40 level and expect the near-term range to be bound between support in the mid-1.36s and resistance closer to 1.38."