GBP/USD near-term outlook remains negative – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, noted Cable’s outlook stays on the bearish camp for the time being.

Key Quotes

“Cable fell below 1.20 in early Asian trade as the UK Sunday press focused on PM May’s Tuesday Brexit speech, predicting that the speech will signal plans for a “hard” Brexit in return for regaining control of borders. Sterling volatility has surged back towards levels prevailing around the Brexit vote itself, with o/n vol touching 30% earlier. Sterling might take some comfort from President-elect Trump’s suggestion that he would work towards a quick bilateral trade deal with the UK but we expect the near-term trend to remain bumpy”.

“GBPUSD might have just about done enough to steady intraday, with 1-hour and 6-hour charts suggesting a clear and firm reversal from the overnight low just under 1.20”.

“It should be a quiet session in North America, which may help steady the market. Broader risks are still tilted lower though. The longer-term bear trend remains intact and the GBP needs to regain 1.2150 to steady and extend through 1.2275 or so to really show signs of potential to strengthen”.