Scotiabank strategists Shaun Osborne and Eric Theoret report that recent gains in both the British Pound (GBP) and the Euro (EUR) against the US Dollar (USD) are primarily attributed to broad USD weakness rather than intrinsic strength in the European currencies themselves [1][2]. For the GBP/USD pair, the strategists note that gains into the mid-1.36s are more a reflection of USD softness, though UK survey data, specifically the August CBI Trends survey, indicates a significant improvement in manufacturing orders—the best level since late 2024—and a rebound in industrial pricing power [1]. Technically, GBP/USD (Cable) has met the near-term objective of retesting the May peak at 1.3658, and a sustained move above the 1.3650/60 level is seen as opening the door for an extension towards the 1.41 zone over the remainder of the year [1].
Similarly, the EUR/USD pair has experienced solid gains, which Scotiabank attributes to a broadly lower USD and the narrowing of front-end spreads since late June, supporting improved Euro fundamentals [2]. The strategists highlight that a clear break above the 1.1625/50 zone has reinforced the bullish outlook, with prospects for the EUR/USD to push into the mid-to-upper 1.17s in the short term [2]. Key resistance is identified at the 1.1793 retracement level, while support is seen at 1.1600/25 [2]. Additionally, German Producer Price Index (PPI) data showed a stronger-than-expected increase of 1.1% in July, further underpinning the EUR's recent strength [2].
Both articles emphasize that the underlying trend dynamics for GBP and EUR remain bullish, with technical and fundamental factors aligning to suggest further upside potential if current levels are sustained [1][2]. However, the strategists caution that the primary driver remains USD weakness, and recent investor reactions have been influenced by US policy decisions [2].
No specific market reactions, such as price changes or trading volumes, are mentioned in the sources. Forward-looking statements from Scotiabank suggest that a sustained break above key technical levels could lead to further gains for both GBP/USD and EUR/USD in the coming months [1][2].
CONCLUSION
Scotiabank strategists attribute the recent bullish momentum in both GBP/USD and EUR/USD primarily to US Dollar weakness, with technical and fundamental indicators supporting further gains if key resistance levels are breached. The outlook remains positive for both currency pairs, contingent on the continuation of current USD trends and supportive economic data.