GBP/USD outlook remains constructive – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne, noted Cable’s stance should stay constructive while above the 1.3335/50 band.

Key Quotes

“UK consumer lending and money supply data were a little weaker than expected for Oct, helping take the edge off of the GBP rally to a two month high versus the USD that was sparked by news yesterday that the UK/EU had reached a deal on the cost of exiting the European Union. Reduced risks of a “hard” Brexit have also helped firm up BoE rate expectations modestly for 2018 but we caution that a lot of work still needs to be done (on border issues, EU citizens’ rights etc.) before an orderly Brexit process is assured”.

“GBPUSD rallied strongly yesterday but intraday patterns suggest that Cable has peaked in the short-term, with price action forming a bearish “evening star” through European trade. GBP dips have been relatively shallow, however, with the pound supported blow 1.34. The broader trend looks constructive, particularly the GBP’s swift move above resistance in the 1.3335/50 area yesterday – which now figures as major support. We are constructive while the pound remains above this support zone”.