The Pound Sterling (GBP) remains steady in the lower/mid-1.33s, with sentiment-driven consolidation following the post-budget rally, while traders await Friday’s UK trade and industrial production data and weigh the BoE’s policy outlook for 2026, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Limited fundamental risk ahead of BoE data

"The pound is steady, extending its tight consolidation in the lower/ mid-1.33s. The GBP appears to be lacking a fresh catalyst in the aftermath of the post-budget relief rally, with a move that appears to have been completely driven by sentiment (as reflected by a 0.9 reading on the rolling 21 day correlation between the GBP and its 3M risk reversal)."

"Fundamental risk events are limited ahead of Friday’s trade and industrial production releases, and comments from the BoE remain relatively dovish signaling no material change in the outlook for lower policy rates."

"Markets are fully pricing a 25bpt cut at the next BoE meeting on December 18 however the outlook for 2026 appears less certain as policymakers assess the need for additional easing."