GBP fades short-lived CPI rally - Scotiabank

The Pound Sterling (GBP) is also steady and attempting stabilization following a recent run of weakness, holding on just above its late June low - a break of which would call for a shift in the bull trend, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets remain focused on BoE cuts

"The UK CPI release came in higher than expected on both headline (3.6% y/y vs. 3.4% y/y prev. & exp.) and core (3.7% y/y vs. 3.5% y/y prev. & exp.), offering the pound a short-lived pop. Short-term rates markets have seen a marginal fade in expectations for BoE easing however the market continues to price nearly one full 25bpt cut for the next August meeting and a cumulative 50bpts of easing by year-end."

"The RSI has drifted into bearish territory and is now hovering just above the oversold threshold at 30. The recent pullback has been swift, breaking below the 50 day MA (1.3501) that we had seen as offering medium-term support. The June 23 low (1.3371) is a critical near-term support level and its break would violate the bullish trend that we've observed since mid-January."