GBP is weak within range – Scotiabank

The Pound Sterling (GBP) is weak, down 0.4% against the US Dollar (USD) and underperforming all of the G10 currencies as we enter Friday’s NA open.

Markets eye UK fiscal developments, possible taxes

"The move appears to be driven by sentiment as markets remain concerned about the UK’s fiscal situation with media reporting of possible windfall taxes on banks. Risk reversals are drifting somewhat lower, as the options market prices in a marginally greater premium for protection against GBP weakness."

"Fundamentals are steady, as the 2Y UK-US yield spread hovers just below its recent high at the upper end of its multi-year range. The latest pullback has dragged the RSI back to neutral, and GBP/USD remains unable to break away from its recent congestion around the 50 day MA (1.3496)."

"The prior medium-term bull trend looks to have stalled in a flat, wide range around 1.35. We look to a near-term range bound between 1.3420 support and 1.3520 resistance."