Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the British Pound (GBP) is trading fractionally lower against the Dollar, with limited fresh data beyond a slightly contractionary services PMI. Bank of England (BoE) communication has been mixed, though rate expectations have recently recovered and yield spreads stabilized. Markets see little chance of tightening in June but nearly two 25bp hikes priced by year-end, while GBP/USD remains confined between 1.33 and 1.35.

Pound steady within tight trading band

"The pound is also trading fractionally lower with no meaningful data beyond the final services PMI’s offering a near-50 print (49.3) signaling marginal contraction."

"Recent BoE communication has been mixed, with hawkish leaning comments from MPC member Greene and dovish labor-related concerns expressed by Gov. Bailey."

"BoE rate expectations recovered over the past few sessions, and yield spreads are showing signs of stabilization."

"Markets are pricing little risk of tightening at the June 18 meeting but anticipate nearly two full 25bps hikes by December."

"Neutral—the RSI is close to neutral at 50, and recent price action has been closing congestion centered around the 50 day MA (1.3450). We await a break of the local range roughly bound between 1.3300 and 1.3500."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)