Bullish GBP sentiment is weakening – Scotiabank

The Pound has retreated from their mid-year highs against the USD. Economists at Scotiabank analyze GBP’s outlook.

Sentiment and technical signals tilt bearish

Technical signals are leaning bearish after GBP/USD broke below bull trend support in the 1.28 area at the start of August.

Investors are concerned that high BoE policy rates will crush growth but recent data revisions have shown the UK economy to be much stronger and more resilient than previously believed. 

Markets are pricing in significantly less BoE rate easing ahead than the Fed or ECB which may cushion GBP losses.