GBP/USD  retains weak undertone - Scotiabank

The pound’s modest stabilization following the flash crash drop does not appear sustainable, according to Scotiabank Strategists, and they think the market showed the first signs of resuming its bear trend last week as the GBP slipped under support in the upper 1.22s.

Key Quotes

“UK CBI industrial trends survey data brought mixed news for the GBP; manufacturing orders weakened sharply in October to –17 from –5 in September while growth in output slowed. The quarterly business optimism index rebounded strongly from the immediate post-Brexit trough of –47 to –8. But while the immediate panic around Brexit has stabilized, the economy may be about to experience another hit to sentiment as businesses (banks, manufacturers) are starting to form their post-Brexit exit strategies. Focus on UK GDP data out this Thursday.”

“GBPUSD short-term technicals: negative—Sterling retains a weak undertone. The pound’s modest stabilization following the flash crash drop does not appear sustainable and we think the market showed the first signs of resuming its bear trend last week as the GBP slipped under support in the upper 1.22s. We see resistance at 1.2285 now and look for losses to pick up towards 1.21 below minor support at 1.2175.”