GBP/USD: Downside momentum gathers – OCBC

GBP/USD is changing hands at above 1.3830 as the 1.3800 base continues to be firm for the cable. In the view of analysts at OCBC Bank, yield differentials continue to lead the market for now, therefore, the multi-session trajectory still favours the USD.

Key quotes

“Bank of England’s Bailey, in ‘a note of realism’, warned that risks are tilted to the downside. Not much bias for pulling back monetary stimulus detected.”

“Expect consolidation around the 1.3800 to 1.3850 range for now, but the move lower may be inevitable if the USD bounce persists. Nonetheless, expect the GBP to likely outperform the rest of G-10”

“BoE’s Bailey showing no signs of increased optimism, leaving no GBP-positive drivers from the relative central bank dynamics front.”