GBP/USD aims to stabilize above 1.3925 – Scotiabank

FX Strategists at Scotiabank remain bearish on Cable, adding that some stabilization could come on a breakout of 1.3925.

Key Quotes

“Sterling is under-performing on the day following the release of Q4 GDP data which was revised lower to +0.4% Q/Q (from +0.5%). Weaker household spending seems to be the culprit, reflecting recent fears that higher inflation is eating into consumer spending power. We think the simmering feud within the ranks of the ruling Conservative party are serving to undermine the GBP’s outlook amid rising speculation about the Prime Minister’s position (divided party, a split Cabinet, no parliamentary majority and some risky local elections looming on the horizon for early May)”.

“Near-term trends look a little soft, reflecting the offered tone in the pound seen for much of the week so far but Cable found a bid around the 40-day MA (1.3870). Intraday price action suggests a minor “hammer” low may have formed through late morning London trade but the pound needs to get above 1.3925 at least to stabilize”.