GBP/USD Range Trade Favors Pound as Scotiabank Sees Upside Bias
Scotiabank strategists are predicting that the British pound will remain rangebound against the US dollar in the short term, but with a bias toward upside risk. The bank's analysis points to a tug-of-war between supportive UK fundamentals and persistent US dollar strength.
The pair has been trading within a well-defined band for several weeks, with Scotiabank attributing this to a balance of risks that is skewed in favor of the pound. This dynamic has created a stalemate, keeping GBP/USD rangebound.
Scotiabank's upside bias is rooted in several factors, including the pound's undervaluation on a purchasing power parity basis and UK economic data showing surprising strength. Political stability following the recent general election has also improved investor sentiment toward UK assets.