Pound Suffers as Oil Prices Erode Support from PM Burnham

The British Pound is experiencing weakness against the US Dollar, with Scotiabank strategists pointing to higher oil prices as a key factor. According to Shaun Osborne and Eric Theoret, GBP/USD has been soft but mid-pack within the G10, with domestic data and Bank of England events limited ahead of Governor Bailey's speech. They attribute recent Pound strength to politically-related sentiment following Prime Minister Burnham's arrival in late June.

However, this support is being eroded by rising oil prices, which are causing investors to price a higher premium for downside protection. The strategists note that the break below 1.35 has refocused attention on mid-1.34s and 1.33 support levels. They describe their outlook as neutral/bearish, citing the RSI's plunge into bearish territory.