Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is slightly weaker as it gives back part of yesterday’s strong advance, helped by expectations of a centrist, market-friendly Burnham government. United Kingdom (UK) data were mixed, with robust Gross Domestic Product (GDP) offset by softer Industrial Production. From a technical perspective, they argue the early July bull reversal remains intact and see scope for gains toward at least 1.3650.

Bull trend targets retest of 1.3650

"The GBP is a mild underperformer on the session as markets give back some of yesterday’s solid gains. Investors appear to have been cheered by reports suggesting that team Burnham has vetoed Ed Miliband as an option for chancellor, preferring instead current Home Sec. Mahmood."

"PM-to-be Burnham’s rumored top team is going to be centrist which also means market-friendly. But that will ruffle feathers of left-wingers who effectively pushed Starmer out."

"UK data released earlier was mixed. UK May GDP was stronger than forecast, rising 0.7% in 3m/3m terms. The UK economy saw solid growth in H1 overall. But May Industrial Production was weaker than expected (-0.5% M/M), albeit with very mixed components while the Trade deficit narrowed."

"Bullish—Sterling has given back a little of yesterday’s solid gain but the spurt higher has livened up the charts and sets the pound up for a further extension of the early July bull reversal."

"The fresh short-term cycle high and a bullish alignment of short-, medium-, and long-term trend oscillators suggest minor dips are a buy and that GBP gains can extend towards a retest of 1.3650 at least in the near-term. EUR/GBP is trading back from yesterday’s one-year low but technical trends here also look positive for the pound overall."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)