GBP Movement Mirrors USD Trends, Says Scotiabank

According to Shaun Osborne, the Chief FX Strategist at Scotiabank, the Pound Sterling (GBP) is currently following the broader trends of the US Dollar (USD). This is occurring in the absence of any significant domestic fundamental developments in the United Kingdom. Without major economic or political events at home to drive its value, the GBP’s performance is closely tied to how the USD is faring in the global currency market.

GBP’s Performance Against the Euro

Housing Market Impact: The RICS House Price Index for February came in lower than expected, registering at 11 compared to a forecast of 20. The Royal Institution of Chartered Surveyors attributes this decline to increasing uncertainty and waning confidence. Recent tax hikes and the slow progress in rate cuts have contributed to dampening market sentiment, which could potentially have implications for the overall economic health and, by extension, the GBP.

BoE’s Influence on GBP-EUR Dynamics: Despite the housing market setback, the Bank of England’s (BoE) cautious approach to easing monetary policy is having a positive impact on the GBP. This cautious stance is helping the GBP regain some ground against the Euro. After sharp gains in early March, the GBP-EUR cross is showing signs of stabilizing around the 0.8450 level. This indicates a degree of strength in the GBP relative to the Euro, potentially presenting opportunities for currency traders.

Short – and Medium – Term Outlook for GBP

In the current trading scenario, the GBP has experienced a mild loss, but its spot trading remains well within the range of the previous day. Yesterday, GBP gains extended to just under 1.30, reaching its highest level since early November. Looking at short – and medium – term charts, the trends are generally supportive of the GBP. On minor dips, the currency is expected to find support ahead of the 1.2910 level. Resistance is first encountered at 1.30, and if breached, the next significant levels are at 1.3125/50. This suggests that while there may be some short – term fluctuations, the overall outlook for the GBP in the coming weeks and months appears to be relatively positive, barring any unforeseen major events.