GBP/USD short-term technicals are positive - Scotiabank

Eric Theoret, Strategist at Scotiabank, notes that GBP/USD technicals are bullish after breaking above the 1.2645/50 area. The analyst however, expects gains to fade nearer 1.28.

Key Quotes

“Cable is taking advantage of the volatility in the USD and stronger UK data to push ahead; Sterling has, however, lost ground to the EUR overnight. UK CIPS service PMI rose to 55.2 in November a 10-month high, from 54.5 in October and confounding expectations of slower growth in this sector. The Composite PMI rose to 55.2 also, well ahead of expectations also (54.0).

“GBPUSD short-term technicals: bullish—Short-term patterns are positive for Cable. The pound has risen steadily from the 1.24 level over the past week and has sustained a break through key, short-term resistance at 1.2645/50. From here, there is major resistance at 1.2818 (early July low) which is perhaps reachable in the next week or two. We expect gains to fade nearer 1.28.”