GBP/USD Range-Bound Amid BoE Tightening Expectations

The British Pound (GBP) is currently trading in a range-bound manner against the US Dollar (USD), according to Scotiabank strategists Shaun Osborne and Eric Theoret. Despite being slightly softer, the pair remains supported by expectations of further tightening from the Bank of England (BoE) into year-end.

The strategists note that the BoE's outlook is 'supportive' for the pound, with markets pricing in incremental hikes for November 5th and December 17th. Specifically, short-term rates markets are currently pricing in 16 basis points of tightening for November 5th and just over 30 basis points for December 17th.

The pair is expected to remain within a near-term range of 1.3500-1.3600, with traders watching fiscal risks into the Autumn Statement scheduled for late October. The strategists highlight that while the medium-term trend is bullish, there are concerns about sentiment-related movement tied to fiscal risks.