GBP/USD potential visit to 1.2766 – Scotiabank

Eric Theoret, FX Strategist at Scotiabank, keeps the neutral/bearish outlook on Cable in the near term horizon.

Key Quotes

“GBP is weak, down 0.2% vs. the USD and underperforming all of the G10 currencies with the exception of NOK. Sentiment is dominant with options markets pricing a sizeable increase in the premium for protection against GBP weakness as market participants assess the shifting margin of victory for Conservatives into next Thursday’s election. Renewed GBP weakness appears to have coincided with the release of an Ipsos MORI telephone poll showing 45% support for the Conservatives (-4%) and 40% for Labor (+6%)”.

“Momentum signals have shifted considerably and the RSI has drifted below 50 into bearish territory. The short-term MA’s are confirming, with the crossing of the 9 day MA below the 21 day MA. We look to this week’s range roughly bound between the mid-1.27s and 1.29, and note the potential for weakness toward the 50 day MA at 1.2766”.