The Pound Sterling (GBP) is little changed just below 1.30. Spot traded just shy of the figure yesterday but option barriers and a little caution ahead of tomorrow’s CPI data for June are keeping gains in check, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Potential bull flag developes around the recent high

“Note that EURGBP edged under 0.84 for the first time in almost two years yesterday. The Bank of England (BoE) policy debate remains intense among rate setters, reflected in swaps pricing in 12bps of easing risk for the August 1 decision. The Labour government’s desire to reset relations with the EU still constitutes a source of support for the GBP– especially on the cross—I believe.”

“Spot is consolidating below 1.30. Limited GBP losses, solidly bullish trend momentum signals and the pattern of trade developing around the recent high (potential bull flag) suggest pressure for a bullish extension above 1.30 remains intense. Last July’s high sits at 1.3142. Support is 1.2950 and (firmer) 1.2900/10.”