The Pound Sterling (GBP) is modestly lower ahead of Tuesday’s North American session, with limited domestic data leaving the market focused on Bank of England policy, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

BoE Governor Bailey offers little guidance on policy

"The pound is soft, down a fractional 0.1% and a mid-performer among the G10 currencies as we head into Tuesday’s NA session. Domestic releases have been limited to second tier house price data and this week’s data calendar is relatively empty, intensifying headline risk around the BoE."

"Comments from Gov. Bailey have offered little in terms of guidance as he acknowledged that policymakers were currently assessing the government’s latest budget while highlighting the need to investment and potential growth. Markets have almost fully priced a 25bpt cut for the December 18 meeting, and are pricing another 25bpt cut by next June."

"The outlook for relative central bank policy remains supportive for the GBP, as we expect the BoE to ease less than the Fed. The 2Y UK-US spread has recovered through most of November, halting the pullback from late October with a modest retracement observed over the past several weeks."