Markets see low risk of BoE easing this week – Scotiabank

The British pound (GBP) is a moderate performer of the session, helped by the prospect of the BoE walking away from this week’s rate decision and holding off on rate cuts until the end of the year, notes Shaun Osborne, chief FX strategist at Scotiabank.

GBP exceeds

“Swaps reflect a little more than 25% risk of a downside this week. Tomorrow’s CPI data is expected to underline the BoE’s patience; Headline CPI is expected to remain flat at 2.2% Y/Y, but core prices and services inflation in particular are expected to remain elevated. September’s Rightmove House Price Index confirmed recent signs of a strong UK housing market, gaining 1.2% this year.”

“GBP’s session gains push higher against consolidating resistance at the low/mid 1.32s. The chart patterns are not as ‘clean’ as the signals on the EUR daily chart, but a push in GBPUSD above 1.3230/40 should signal the possibility of further strength.”

“Like the EUR, however, the GBP is once again receiving some solid technical headwinds from bullishly aligned trend momentum signals on the intraday, daily and weekly charts. This should limit GBP’s downside (mid/towards 1.31s now) and maintain the bull trend. Resistance is 1.3265 and (major) 1.3330.”