GBP/USD neutral/bearish near term – Scotiabank

Shaun Osborne, Chief FX Strategist at Scotiabank, does not rule out a visit to the mid-1.3200s in the near term.

Key Quotes

“Moody’s downgrade of the UK’s sovereign rating to Aa2 late last week does not appear to be having much impact on UK markets; EURGBP slipped to its lowest level since Jul earlier in the session while UK Gilts are modest out-performers in generally quiet fixed income trade today. Market focus remains on Brexit issues broadly and, more specifically, BoE Gov Carney’s comments Thursday”.

“Cable has not made the same downside break from the Sep range seen in EURUSD but it is trading with a softer undertone and is pressuring support at 1.3430 – below which we think the pound will weaken further. Cable has been trading sideways between 1.3430/1.3630 since mid-September and we expect losses to accumulate under 1.34 towards the low/mid 1.32 region”.