GBP holds in upper 1.31 area – Scotiabank

UK inflation expectations remain uncertain, the latest BoE Decision Maker Panel survey suggests, notes Shaun Osborne, chief FX strategist at Scotiabank.

BoE survey data supports cautious rate view

“While the panel expects 3 million output prices to moderate slightly (3.6%, down from 3.7% in the last survey), 1-year CPI expectations rose to 2.6%, from 2.5%. The survey suggested no change in high wage growth trends and supports the outlook for cautious rate cuts in the UK over the next few months.

“Sterling’s gains yesterday look a bit more convincing from a technical point of view. A sell-off gain on the day reflects signs of the pound’s steady build-up on declines over the past few sessions. Trend resistance from the late August high was broken yesterday and now serves as support (1.3095). Wins through 1.3175 1.3200/25 short-term target.”