GBP/USD short-term technicals look neutral to bullish  - Scotiabank

Eric Theoret, Strategist at Scotiabank, notes that GBP/USD looks vulnerable as they consider bearish sentiment and near-record positioning. The short-term technical picture however, remains neutral to bullish, according to the analyst.

Key Quotes

“GBP is steady consolidating around 1.2450 just below the 50 day MA at 1.2518. Wednesday’s Autumn Statement passed without much of an impact on GBP as Chancellor Hammond detailed an outlook for greater borrowing and lower growth.”

“GBP remains vulnerable as we consider bearish sentiment and near-record positioning, with several knee-jerk rallies observed in the period since the flash crash from early October. We also note GBP’s remarkable resilience in the period since the U.S. election with a modest 0.6% gain outperforming all of the G10 currencies—their performance ranging from a 1.5% decline in CAD to a 7% decline in JPY.”

“GBPUSD short-term technicals: neutral-bullish—we await a break of the recent consolidation range roughly bound between 1.23 and the upper 1.26s. The 50 day MA (1.2518) delivered resistance in early November however a break would open up the risk of gains toward the November high and the late September congestion range around 1.30. Daily momentum signals are neutral.”