GBP/USD: little evidence to suggest broader trend lower is poised to reverse - Scotiabank

Shaun Osborne, Strategist at Scotiabank notes that GBP/USD technicals remain negative and at best, GBPUSD is consolidating near the upper end of the consolidation range.

Key Quotes

“Sterling is reluctantly rising against the broadly weaker USD. UK manufacturing PMI data was a little disappointing; the 54.3 reading suggests factory output is expanding in October but the result was a couple of tenths under expectations and more than a full point under the September result.”

“Even news that BoE Gov. Carney would extend his stay at the BoE for a year longer than he had originally planned has failed to boost broader GBP sentiment significantly as Brexit risks continue to hang over the pound’s outlook.”

“GBPUSD short-term technicals: negative—Sterling price action has stabilized in the past couple of weeks but there is precious little evidence to suggest that the broader trend lower is poised to reverse. At best, we think GBPUSD is consolidating and currently, the GBP finds itself near the upper end of the consolidation range. We look for strong resistance in the 1.2275/1.2325 range. Key support is 1.2140.”