British Pound: Range-bound against US Dollar ahead of Budget – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret highlight GBP/USD consolidating in a tight mid-1.36 range as a quiet data and Bank of England (BoE) calendar contrasts with softer yield spreads, which have eroded some fundamental support. They note improved sentiment after the leadership transition to PM Burnham, but warn fiscal risk will stay elevated ahead of the October 28 Autumn Statement, with near-term technicals still bullish.

Pound holds gains as spreads soften

"The pound is also consolidating within an incredibly tight range in the mid-1.36s. The data release calendar remains limited and BoE policymakers have been quiet for much of August. Yield spreads have pulled back however, eroding a source of fundamental support for the GBP. "

"The steady recovery in sentiment has offered a critical offset, as markets have shed their politically-motivated concerns related to the latest leadership transition and arrival of PM Burnham."

"Fiscal risk will remain elevated into the fall as we look to the Autumn Statement (budget) scheduled for release on October 28."

"Bullish—the RSI is just shy of the overbought threshold at 70, reflecting the impressive rally from late July. The GBP’s latest rally looks to have stalled above 1.3650, around the peaks from early May."

"We note the absence of any meaningful resistance ahead of the 2026 high above 1.3800, and we see support closer to 1.3500. We look to a near-term range bound between 1.3600 and 1.3700."

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