GBP/USD prepped for more range trading and no further BoE action - Scotiabank

FX Strategists at Scotiabank note that GBP/USD seems prepped for more range trading and no further BoE action at this point.

Key quotes

“UK employment data came in bang in line with expectations; job gains of 174k for August compare with consensus calls for 171k. Retail sales data are due tomorrow (expected weak) ahead of the BoE policy decision but the Cable market appears to be betting on the BoE maintaining a steady as she goes course for now. O/n vol is relatively low, compared to the event risk priced in around August policy meeting, suggesting markets are prepped for more range trading (and no further BoE action at this point).”

“GBPUSD short-term technicals: bearish—Cable’s drift off last week’s high has extended modestly through the course of this week so far, reinforcing the overhead ceiling for GBP/USD around 1.3450 since late June. The turn lower last week looks potentially decisive and may signal a resumption of the downside probing for the pound; the lower the close this week, the greater the risk of follow through selling developing in the next week or so. Near-term, we see resistance at 1.3230/40; expect GBP sellers to take advantage of modest rallies to get positioned.”