GBP/USD gains to be easily capped by selling interest - Scotiabank

Shaun Osborne, Strategist at Scotiabank noted that they are bearish on GBP/USD and expect minor GBP/USD gains to be easily capped by selling interest, with key resistance at 1.3020.

Key Quotes

“UK data reports today were mixed; consumer and business sentiment improved in September while Q2 GDP was revised slightly higher in the quarter (+0.7%) and slightly lower in the year (2.1%). The current account deficit widened in Q2, however. The mixed data paint a confusing picture for the economy’s underlying condition three months after the Brexit vote but the lack of clarity is harmful in itself. We continue to target 1.25 by year end”.

“GBPUSD short-term technicals: negative—Cable is breaking down technically, we think. Yesterday, we noted that near-term weakness below 1.2980 will serve as a “heads up” warning of a run back to the low 1.29s.”

“Sterling has attempted to recover intraday losses but short-term price patterns suggest heavy selling interest in the upper 1.29s now and we see key, short-term resistance at 1.3020. Major support stands at 1.2925 and looks vulnerable to a test. We are bearish and expect minor GBP/USD gains to be easily capped by selling interest.”