Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the British Pound (GBP) is only marginally firmer versus the US Dollar (USD) despite stronger-than-expected August retail sales. They argue Thursday’s hawkish Bank of England (BoE) hold may cap near-term gains, even as UK politics remain supportive with continued confidence in the government’s fiscal responsibility. Technically, the broader uptrend from June persists, but GBP/USD must hold above the mid/lower-1.33s to preserve ascending support.

Pound struggles to build on data

“The pound is entering Friday’s NA session with a marginal gain and seeing little of the strength that should be following the release of stronger than expected retail sales data for August. The print was solid, and came in well above expectations of a modest contraction in consumer spending. The data follow Thursday’s hawkish hold from the BoE, which may have left limited scope for material near-term strength.”

“In politics, the narrative remains constructive as market participants and media signal ongoing confidence in the government’s efforts to maintain their commitment to fiscal responsibility.”

“Bearish/neutral—the RSI is bearish, having reached the oversold threshold at 30. The medium-term trend from June remains bullish however spot will need to remain above the mid/lower-1.33s in order to maintain the trend of ascending support.”

“We look to near-term support around 1.3320 and see limited near-term resistance ahead of 1.3480.”