For GBP fans, especially if you’re planning to trade GBP/USD, this is what you need to know.
Scotiabank’s Chief FX Strategist Shaun Osborne reported a short-term bearish outlook on Cable. He warns about the low performance of the Sterling, while Cable trades at its lowest since mid-Jan. UK PMI data seems to weigh on GBP sentiment, with a drop in service activity to 53.3 in February from January’s 54.6. The market sentiment on the other hand, was revolving around a “shallower deceleration to 54.1”, Osborne said. Additionally, to put the icing on the cake, he also referred to the latest ISM report, which reflects lower spending on services as an effect of price increases, which in turn, negatively impact consumer activity.
Scotiabank’s Chief FX Strategist draws the attention on the Cable’s “weak undertone.” Going deeper into fundamentals, he points to the Cable’s loss in support at 1.2265 (50% retracement of Jan/Feb’s rally). This in turn triggers additional losses amid the 1.21 area (76.4% retracement at 1.2161). The movement of the currency follows a bearish trend across a series of time frames, which Osborne says “should limit upside scope for the GBP to the mid/upper 1.22 area now; we expect continue expect the GBP to extend its current retracement back to the Jan low (1.1993) in the next few weeks. Sell minor GBP rallies”, according to FX Street news.