GBP/USD to enjoy a gentle rise on a break above 1.38 – Scotiabank

GBP/USD gains marginally as Bank of England (BoE) hike pricing returns. Economists at Scotiabank see price action in the cable as marginally supportive and expect to see further gains on a break above 1.38.

GBP/USD to fall towards 1.36 on a break below 50-DMA at 1.3713

“After falling for three consecutive days, markets placed renewed bets on BoE tightening yesterday (likely as a consequence of the BoC’s hawkish announcement) which are continuing today to price in 17bps in hikes; December meeting OIS are pricing a similarly sized hike from November.”

“The 1.3770 area acted to limit further gains toward 1.38 that remains the key level to beat for the GBP to maintain its uptrend since early October.”

“The cable is being guided to the downside by its 50-day MA and to the topside by its 200-day MA (1.3713 and 1.3784, respectively), with a breach below the former and then the big figure leaving it at risk of declines to the 1.36 level.”