GBP/USD Range-Bound as BoE Tightening Expectations Offset Fiscal Risks

The British Pound (GBP) is being supported by expectations of further tightening from the Bank of England (BoE), according to Scotiabank strategists Shaun Osborne and Eric Theoret. They describe the GBP/USD pair as 'slightly softer' but note that it remains within a bullish medium-term trend.

The BoE's outlook is seen as supportive for the pound, with markets pricing in incremental hikes for November 5th (16 basis points) and December 17th (just over 30 basis points). The strategists highlight that the September 17 meeting offers little in terms of new information, but traders are currently pricing in a significant tightening of monetary policy.

However, the pair is expected to remain range-bound between 1.3500 and 1.3600 in the near term, as traders watch for fiscal risks tied to the Autumn Statement (budget) scheduled for late October. This event could lead to sentiment-related movement that may impact the pound.