GBP/USD: Bears to take the lead on a break below 1.2870 – OCBC

There has been some short covering in the GBP, after PM Johnson cut a deal with party members over his new bill, and it is now more likely to pass through UK Parliament. All in all, Terence Wu from OCBC Bank still remains negative on the GBP at this point, pending clarity on the Internal Market Bill and the Bank of England and watch the 1.2870 support. 

Key quotes

“The compromise that PM Johnson arrived at with his party members may be scant consolation from the EU’s point of view. The possibility that the UK can unilaterally alter the Withdrawal Agreement remains unchanged.” 

“On the BoE front, chatter is that it will be priming the market for more asset purchases in 4Q. Expect it to sound dovish overall.”

“The bounce higher in GBP/USD was capped at 1.3000, and expect this to remain as the first resistance northwards.” 

“Bears will have to first breach 1.2870 to get better traction.”