GBP/USD appears poised for another leg lower  - Scotiabank

Shaun Osborne, Chief Strategist at Scotiabank notes that GBP/USD outlook remains negative, with key support at the base of the post-June consolidation at 1.2935 and indicators bearishly aligned.

Key Quotes 

“Sterling is quietly under-performing. Bloomberg’s monthly poll of UK forecasters suggest that there has been little change in thinking on economic prospects – despite the run of relatively better than expected economic data prints recently. Most economists expect a sharp slowdown in growth in 2017 from this year (poll average forecasts 2016 GDP at 1.7% and 2017 at 0.7% - though both outlooks reflect a modest upgrade from the survey a month ago). The consensus also expect further BoE rate easing this year (BoE key rate seen at 0.1% end 2016 from 0.25% currently).”

“GBPUSD short-term technicals: negative—Cable has edged from key support at 1.2935 – the base of the post-June consolidation – but remains vulnerable to weakness. Longer-term price patterns are weak, following the reversal from mid 1.34 resistance earlier this month and appears poised for another leg lower following the mid-year slide. Trend strength oscillators are aligned bearishly on the short, medium and long-term studies. We look for minor rallies to be readily sold into between 1.3075/1.3125.”