The Pound Sterling (GBP) is up a marginal 0.1% against the US Dollar (USD) and mid-performer among the G10 as we head into Thursday’s NA open, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

UK bond market in focus

"The UK bond market is once again in focus, as the latest 10Y gilt auction generated the lowest oversubscription rate since December 2023. The UK’s fiscal outlook remains a core risk for the GBP into the November 26 budget release."

"The BoE’s Decision Maker Panel (DMP) inflation expectations were mixed, with the 1Y measure surprising slightly to the upside (3.5% vs. 3.4% exp. & prev.) while the 3M measure came in as expected at 3.7%. UK-US yield spreads are offering fundamental support following Wednesday’s ADP-fueled surge, and threatening fresh 15 month highs."

"The GBP’s technical picture is also largely neutral with an RSI hovering just below the dividing threshold at 50. We are reassured by the GBP’s push back above its 50 day MA (1.3463) and see scope for a sustained push back above 1.35. We see limited meaningful resistance ahead of the mid-1.36 area and look to a near-term range bound between 1.3450 support and 1.3550 resistance."