British Pound: Recovery tests key resistance against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report the British Pound (GBP) is fractionally higher versus the US Dollar (USD), with sentiment improving after PM Starmer’s resignation announcement. They see support from a repriced Bank of England (BoE) rate path following the latest Oil rally and describe GBP/USD’s recovery as increasingly entrenched as it attempts to break above 1.3400 and trades within a 1.3350–1.3450 range.

Pound sentiment improves on policy repricing

"The pound is up fractionally vs. the USD and is a mid-performer among the G10 currencies as we head into Thursday’s NA session with focus still largely centered on broader developments in the absence of high-level domestic releases."

"The recent recovery in sentiment remains important, signaling market confidence in the aftermath of PM Starmer’s June 22 resignation announcement."

"Fundamentally, the outlook for relative central bank policy is providing additional support as markets reprice the BoE’s rate path in light of the latest rally in oil prices."

"Neutral/bullish—the GBP’s recovery is looking even more entrenched as it stages its first meaningful attempt at breaking above recent resistance around 1.3400 and levels that roughly correspond to the 50 and 200 day MA’s."

"We look to a near-term range bound between 1.3350 and 1.3450."