GBP/USD’s rebound from 1.3000 loses steam at 1.3075

• The sterling fails to regain 1.3100, remains near mid-term lows.
• Pound recovery falters despite BoE rate hike expectations. 
• GBP/USD decline could extend to 1.2500 – ScotiaBank.

The pound sterling remains slightly positive on Monday, buoyed by a moderate risk appetite although its rebound from lows near 1.3000 has been capped below 1.3075.

Cable remains bearish at 16-month lows

The GBP/USD is trapped within a wider bearish trend following a three-week sell-off. The pair has depreciated nearly 5% from late February highs at 1.3640, to hit levels right above the 1.3000 psychological level for the first time since November 2020.

The sterling has seen a moderate increase on demand on Monday, favoured by a somewhat weaker dollar amid a mild sentiment improvement on the back of peace talks between Russia and Ukraine. Beyond that, investors’ expectations that the Bank of England’s will hike interest rates at next Thursday’s meeting has been supportive for the GBP.

GBP/USD might extend its decline towards 1.2500 ­– Scotiabank

Regarding the near-term expectations, the FX Analysis Team at Scotiabank sees the pound extending its downtrend: “Cable aims for a break under 1.30. Sterling faces no clear support until the mid-1.28s that marked the lows of Oct/Nov of 2020, with losses possibly mounting quickly toward 1.25.”

Technical levels to watch