GBP soft as markets digest dovish BoE comments - Scotiabank

The Pound Sterling (GBP) is soft, down 0.3% against the US Dollar (USD) and underperforming most of the G10 currencies into Wednesday's NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Multi-month bull trend is looking exhausted

"Comments from BoE MPC member Taylor, a minority dove who last voted for a 25bpt cut as the majority voted to hold, have highlighted concerns about the UK's ability to achieve a soft landing and downside risks to inflation that could require additional easing."

"Rates markets are pricing in about 56bpts of easing by year end, down adding about 15bpts over the last month or so. Markets are pricing a 90% chance of a cut for the next BoE meeting on August 7. The multi-month bull trend is looking somewhat exhausted following a period of negative divergence in which the momentum indicators failed to confirm the fresh highs in spot."

"GBP/USD has struggled above anticipated resistance in the mid-1.37s. We continue to highlight the importance of medium-term support at the 50 day MA (1.3462) and anticipate a near-term range bound between 1.3650 support and 1.3750/1.3780 resistance."