GBP holds in upper 1.31 area – Scotiabank

UK inflation expectations remain sticky, the latest BoE Decision Maker Panel survey suggests, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

BoE survey data supports cautious rate view

“While the panel expects 3m output prices to moderate slightly (3.6%, down from 3.7% in the last survey), 1Y CPI expectations edged up to 2.6%, from 2.5%. The survey suggested no change in elevated wage growth trends and support the outlook for cautious reductions in UK rates in the next few months.”

“Sterling’s gains yesterday look a little more persuasive from a technical point of view. A sold gain on the day reflects signs of steady accumulation of the pound on dips over the past few sessions. Trend resistance off the late August high was broken yesterday and now serves as support (1.3095). Gains through 1.3175 target 1.3200/25 in the short run.”