GBP/USD  is facing more weakness ahead - Scotiabank

Shaun Osborne, analyst at Scotiabank, noted that they still rather think the GBP is facing more weakness ahead despite recent strength on the back of strong UK data. Gains are starting to lose momentum without the support of additional data releases.

Key quotes

“UK data releases this week have tempered some of the immediate worries about the health of the UK economy in the post-Brexit environment but it is still too early to pass judgement on prospects and the data have forced short positions to cover, rather than drive renewed outright long interest in a cheap pound.”

“We still rather think the GBP is facing more weakness ahead. Gains are starting to lose momentum without the support of additional data releases.”

“GBPUSD short-term technicals: bearish—The Cable rally is showing signs of stalling right around the 40-day MA (1.3142). Intraday signals suggest a minor peak is in on the hourly charts and the 6-hour candle signals are turning a little heavy. We look for losses to extend to 1.3075/80 intraday. Above 1.3170/80 is needed to revive the bull run.”