The Pound Sterling (GBP) edged lower in Asian trade but steadied and recovered somewhat in European dealing, Scotiabank’s chief FX strategist Shaun Osborne notes.

GBP/USD is steadying around the low 1.28 area

“UK data reports earlier reflected more or less as expected lending and mortgage approvals but the CBI’s (volatile) retail survey data looked soft for July. Swaps are pricing in marginally more risk of a rate cut this week (14bps) than last week (when pricing indicated 10-11bps of easing risk factored in).”

“GBP’s drift from the mid-July peak above 1.30 suggests some rate cut potential may already be factored in to spot.”

“Spot retains a soft undertone but losses may be steadying around the low 1.28 area (50% retracement support from the June/July rally). Regaining 1.29 intraday would be a positive but it is possible that the soft undertone will persist for another few days and perhaps extend to 1.2775 or so before steadying.”