GBP/USD remains bearish near term – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, noted Cable’s outlook in the short term remains tilted towards the bearish side.

Key Quotes

“GBP is weak, down 0.7% vs. the USD and underperforming all of the G10 currencies, testing fresh multi-week lows as market participants consider political risks into PM May’s speech on Wednesday. The U.K.’s manufacturing PMI delivered a modest disappointment—55.9 vs. 56.2 exp. & 56.7 previously. Bank of England rate expectations remain firm, with OIS pricing an 83% chance of a November hike. Last week’s comments from Gov. Carney were hawkish as he guided to a limited, gradual tightening path”.

“GBP is under pressure, flirting with 1.33 and testing levels last seen in mid-September. Momentum signals have shifted aggressively and are threatening a push into bearish territory. DMI’s are converging in a manner that is suggestive of a shift in the balance of risk. We note the absence of support ahead of 1.3220—the level roughly corresponding to the mid-point of the August-September rally”.