The Pound Sterling (GBP) is underperforming all of the G10 currencies with a 1.1% decline against the US Dollar (USD), weakening in response to renewed fiscal concerns that have driven UK yields to fresh multi-decade highs, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP continues to trade within the choppy but flat range

"Chancellor Reeves is looking to maintain adherence to a self imposed rule that government spending should be covered by tax revenues within 5 years, and markets are concerned about the government’s ability to deliver on this rule."

"The UK 30Y has climbed to a fresh multi-decade high nearing 5.7%, complicating the government’s task as they prepare to deliver the August (budget) Statement. In terms of data, this week’s highlight will be Friday’s release of retail sales for July. BoE MPC policymakers will also appear before a parliamentary committee on Wednesday."

"The technicals are once again shifting bearish however the c since May. Tuesday’s decline is dragging the RSI deeper below 50 into bearish territory, and recent price action offers little in terms of support ahead of 1.33. We look to a near-term range bound between 1.3320 and 1.3450."