GBP/USD: bearish risks easing - Scotiabank

Yesterday’s snap higher interrupted the bearish evolution of price action to some extend and eases the more immediate risk of a drop to 1.28, said Shaun Osborne, FX Strategist at Scotiabank.

Key Quotes

“The pound traded heavily for most of the day yesterday until comments from BoE policy maker Forbes, suggesting no rush to cut rates, boosted sterling broadly late in the day. Cable has struggled to sustain gains overnight, however, and looks heavy again below 1.32 this morning. Forbes’ comments were not bullish for the GBP, in our opinion; the remarks simply suggested she was leaning towards more policy accommodation but wanted evidence of the economic impact of Brexit. UK retail sales were soft, falling 0.9% in June against a 0.6% decline expected. Fundamental focus falls on the preliminary July PMI data due tomorrow for the first real post-Brexit snapshot of the economy. Note BoE Gov Carney is speaking late tonight (23.35ET) at the G-20.”

“GBPUSD short-term technicals: bearish—Yesterday’s snap higher interrupted the bearish evolution of price action to some extend and eases the more immediate risk of a drop to 1.28 that we had identified earlier in the week. Broader patterns are still rather soft for GBPUSD and we still view 1.32+ levels as somewhat “rich” and liable to attract selling interest. Weakness below 1.3215 (now resistance) overnight should see spot ease back to 1.3165 or so near-term.”