GBP Holds Pullback Support at 1.31 Second Low – Scotiabank

Britain’s S&P Global Manufacturing PMI for August was confirmed yesterday at 52.5, the index’s strongest result in two years, notes Shaun Osborne, chief FX strategist at Scotiabank.

GBP gains above 1.3160 ​​may generate some short-term gains

“Growth momentum, still high wages and inflation hotspots will keep the BoE on the sidelines in September (only 5-6bp of cuts are in for the 19 policy meeting) as many other central central banks ease policy. Slower interest rate cuts in the UK compared to other leading central banks should limit the scope for GBP losses in the near term.”

“GBP/USD has corrected just under a quarter of the August rally and looks to find support around the 1.3120 Fibonacci retracement (23.6% of the 1.2660/1.3266 rally). A lower close in the week to Friday suggests a consolidation rather than an outright appreciation of the pound.”

“GBP gains above 1.3160 ​​could lead to some short-term gains, while a push below 1.3120 is likely to drive more weakness towards the 1.2950/1.3050 range.”