GBP/USD renewed weakness reaffirms broader bearish outlook - Scotiabank

Weakness in the GBP today extends losses below the base of the July consolidation and reaffirms the broader bearish outlook for the pound, said Shaun Osborne, Chief Strategist at Scotiabank.

Key Quotes 

“BoE MPC member McCafferty’s dovish comments pushed Cable below 1.30 in early Asian trade and poor trade data helped sustain downside pressure on the pound through London dealing. McCafferty’s remarks, suggesting that more easing was likely if the UK economy slowed in line with initial post-Brexit survey signals, did not provide any more insight beyond the policy outlook framed by Governor Carney last week, however.”

“UK data reports reflected in line with expectations industrial production at +0.1% for June (but weaker-than-forecast manufacturing at -0.3%). The trade deficit was an uncomfortable blow out at –GBP12.4bn, however.”

“GBPUSD short-term technicals: bearish—Weakness in the GBP today extends losses below the base of the July consolidation and reaffirms the broader bearish outlook for the pound. We see support at 1.2818, the early July low, but we think there is immediate risk for Cable to the low 1.27s. We see resistance at 1.30 now – a big psychological resistance point. EURGBP should rally further above 0.8610, the recent peak.”