GBP/USD outlook stays bearish near term – Scotiabank

FX Strategist at Scotiabank Eric Theoret noted Cable’s key support levels emerge at 1.2720 ahead of 1.2648.

Key Quotes

“The decline has been steady, with no material reaction to the release of domestic public finance data. Focus is on Brexit as market participants look to this week’s position papers covering legal relationships and the role of the ECJ. There are no major domestic releases scheduled ahead of Thursday’s 2nd Q2 GDP data. The 2Y U.K.-U.S. spread is widening for a second consecutive session and risk reversals are pricing a marginally greater premium for protection against GBP weakness. GBP appears vulnerable and we remain bearish”.

“GBP is testing fresh lows at levels last seen in late June, testing the lower 1.28s and resolving its recent consolidation around the 100 day MA (1.2878). We note the absence of any material support ahead of 1.2720 and highlight the 200 day MA at 1.2648”.