Pound Sterling (GBP) is also quietly consolidating its latest push to a fresh multi-year high, trading just below Thursday’s local top in the upper 1.37s, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
GBP is consolidating spread-driven gains
“As with EUR, this week’s gains have been driven by UK-US yield spreads which have pushed back into positive territory. The data calendar has also been limited to PMI’s with manufacturing marginally contractionary and services slightly expansionary.”
“Next week’s calendar offers little beyond the final Q1 GDP release, leaving the focus squarely centered on broader developments and headline risk from the BoE with a specific focus on the ECB’s central banking forum in Sintra, given BoE Gov. Bailey’s attendance. The trend is bullish and the RSI is at 66 leaving ample space for further upside as it remains short of the overbought threshold at 70.”
“The emergence of negative divergence (momentum not confirming the highs in spot) is somewhat concerning but we remain bullish for now and will watch closely for any signs of a turn. The 50 day MA (1.3438) remains a critical medium-term level of support and the chart offers little major resistance ahead of the psychologically important 1.40 level. The near-term range is likely to be defined by 1.3600 support and 1.3800 resistance.”
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