GBP/USD: Losses are liable to extend, potentially back to the 1.20/1.21 area – Scotiabank

Sterling is a clear underperformer on the session, although Cable losses are moderate on the day and it is trading off the earlier low. Economists at Scotiabank analyze GBP outlook.

Gains above 1.2400/1.2405 in the short run may stabilize Cable

Sterling has rebounded from earlier session dip but the Pound still hit new, short-term cycle lows (back to its weakest since late May) and broader price patterns are bearish. 

Trend resistance is capping GBP gains at 1.2400/1.2405. Gains above here in the short run may stabilize the Pound. 

The broader bear trend remains well-entrenched across a range of timeframes which suggests Sterling losses are liable to extend – potentially back to the 1.20/1.21 area.