GBP/USD short-term outlook remains bearish – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne sticks to the bearish stance on Cable in the near term.

Key Quotes

“Sterling is under-performing on the day. UK consumers are less confident about the outlook; the November Gfk reading fell to -8, well below forecasts (-4), from -3 in October. This was the lowest level since July. All five subcomponents fell in the survey, suggesting consumers are “resolutely gloomy” on the outlook, according to Gfk. In addition, the BoE’s latest stress tests on local banks revealed a “fail” mark for RBS (forcing it to boost capital plans) and highlighted capital inadequacies at Barclays and Standard Chartered, according to Bloomberg”.

“Sterling has failed to participate in the currency rally against the USD and retains a soft feel overall. Cable experienced another mini-meltdown earlier in the session when spot dropped below 1.25 and quickly fell to the low 1.24s without touching the sides. GBPUSD is holding near the low end of the post October consolidation band (support here is 1.2380) but still looks vulnerable to the downside. We see resistance at 1.2505/10 now and look to fade GBP gains”.