GBP: Maintaining Bullish Bias vs USD Ahead of Data Risks – Scotiabank

GBP/USD is trading around 1.3556, maintaining an overall bullish bias against the dollar. Scotiabank strategists Shaun Osborne and Eric Theoret note that despite sterling underperforming major European currency counterparts, it has still hit a three-month high against the dollar, with short-term momentum favoring further upside.

**Data Risks Are the Key Short-Term Variable**

Markets are closely watching upcoming UK inflation and GDP data, which could influence the Bank of England's monetary policy path. Scotiabank believes that better-than-expected economic data could provide a temporary boost to sterling; however, subdued UK growth prospects and persistent inflationary pressures limit further upside for the pound. Traders should be wary of heightened volatility around the data releases.

**1.36 Poses Significant Technical Resistance**

According to Scotiabank's analysis, the 1.36 level is viewed as a key technical resistance point for GBP/USD, historically also a zone of notable selling pressure. The bank expects any move toward 1.36 could trigger substantial selling, making it difficult for sterling to push higher. Immediate resistance sits at 1.36, with secondary resistance at 1.3650; immediate support is at 1.3450, with secondary support at 1.3400. A failure to break above 1.36 could see the pair shift into range trading or a pullback.

**Strategy Implications**

Ahead of the data risks, Scotiabank maintains a bullish bias against the dollar but emphasizes the difficulty of breaking above 1.36. For forex traders, a break above 1.36 could signal further gains, while failure to do so warrants caution against the risk of a spike-and-reverse decline.