GBP/USD bearish near term – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne argued Cable could slip back to the mid/low-1.2800s in the near term.

Key Quotes

“The UK reported stronger than expected retail sales date for last month, rising 0.9% against expectations of a 0.5% advance. The numbers represented something of a rebound after the weak May report (-1.5%), however, and were driven by summer clothing sales. Our UK economist does not think the data move the needle significantly for the UK economy overall and, therefore, we do not think the BoE rate hawks will see the data as especially supportive of their decision. Sterling rose briefly on the data but failed to hold 1.30+ levels and spent the remainder of the London trading session on the defensive. Deutsche Bank’s CEO said the bank is preparing for a “hard Brexit” and will move the “vast majority” of assets and some jobs to Frankfurt”.

“After trading positively last week, the pound is more defensive now. Cable has traded heavily since the start of the week following a firm rejection of the 1.31 area on Monday (outside day reversal); the GBP risks perhaps retesting the low/mid 1.28s (mid-Jul low at 1.2816) before stabilizing”.