GBP/USD outlook stays neutral – Scotiabank

Strategists at Scotiabank expect Cable to extend the rangebound trade above the 1.3000 handle in the short term horizon.

Key Quotes

“Sterling is under-performing modestly on the session following the release of very soft UK retail sales survey data. The CBI’s measure of reported sales volumes dropped from +24 in Sep to –36 this month, to the lowest level since 2009. The data may renew concerns that rising inflation is eating into consumer spending power and cast some doubt over the BoE’s willingness to push rates higher ahead next month. Recall, however, that slightly stronger than expected GDP data yesterday was thought to have tipped the balance in favour of a modest hike (which remains more or less fully priced at this point—90% of 25bps hike)”.

“Cable eased off the overnight high in the upper 1.32s to a little under the 1.32 level before recovering ahead of the North American open; intraday price action suggests a low in place at 1.3180/85 now (bullish hourly doji candle) even if the rebound in spot has not been overly enthusiastic. We spot resistance at 1.3275/80 and look for broader range trading to extend above the 1.30 area for now”.