GBP flat and also attempting stabilization - Scotiabank

The Pound Sterling (GBP) is entering Tuesday's NA session unchanged against the US Dollar (USD) as it also seeks to attempt stabilization following a recent pullback, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

Markets soften BoE easing expectations, offering support

"Domestic rate expectations are offering some support as markets soften their expectations for BoE easing. A 25bpt cut is almost fully priced for August 7, but markets are assessing the extent of additional easing by year end and have softened their expectations by about 5bpts over the past week or so."

"The latest CFTC positioning data revealed a significant shift in GBP sentiment, as the bullish $2.4bn net long position was flattened to neutral."

"The GBP's technicals are looking somewhat more worrisome following the latest pullback. The latest lows extended marginally below the mid-July support area in the mid-1.33s, opening up the potential for a shift in trend. Renewed gains toward 1.34 would allow for a return to a more neutral view, while a break to fresh lows targeting 1.33 would shift our outlook in a more bearish manner."