GBP: Market Sentiment Supports Further Gains vs USD – Scotiabank

GBP/USD is currently trading at 1.36296, maintaining a firm range-bound tone. Scotiabank strategists Shaun Osborne and Eric Theoret noted in their latest report that despite the broader strength of the US dollar, the pound has outperformed other G10 currencies, indicating that market sentiment is providing some support for sterling.

**Sentiment and flows dominate short-term direction**

The report stated that the pound's rise is driven more by improved overall risk appetite and capital flows than by UK domestic data. With a light data calendar on the day, market attention shifted to UK Prime Minister Boris Johnson's visit to Kyiv and the upcoming budget announcement on October 28. Scotiabank's analyst team believes that sterling's performance relative to major core currencies is moderate, and short-term movements will continue to hinge on shifts in risk sentiment.

**Policy focus: budget and central bank stance**

Markets are also keeping an eye on the Bank of England's policy outlook. Scotiabank's report mentioned that the market expects no change in the BoE's policy decisions, which limits the scope for further sharp sterling volatility. Ahead of the budget release, investors' assessment of the UK's fiscal outlook could become a key variable influencing the pound. UOB previously noted that the GBP/USD uptrend remains intact, with resistance targeted around 1.3600, and the current price is already trading above that level.

**Technical outlook: bullish but caution advised on pullbacks**

From a technical perspective, GBP/USD is trading near 1.36296, at the upper end of its recent range. Scotiabank did not provide a new target level but emphasized that market sentiment supports further upside. If the budget delivers positive fiscal signals, sterling could extend its gains; conversely, if the dollar regains strength, the pound may give back some of its recent advances.