GBP/USD could face further weakness near term – Scotiabank

In opinion of FX Strategists at Scotiabank, Cable remains poised for further weakness in the short-term horizon.

Key Quotes

“The CBI’s Business Optimism index slumped to -16 this month (from -3 in Sep, the lowest in three years, ) and manufacturing orders continued to slide (-6). Companies look for flat output over the next quarter, the worst forecast since 2015. The survey suggests caution (at best) descending over UK manufacturing amid uncertainty over the Brexit process. PM May’s statement on Brexit yesterday left many key issues unresolved but the back-bench revolt among Brexit hardliners – and some centrists – which threatens to topple her remains in check for the moment”.

“The GBP averted a test of support in the low 1.29s earlier and has found a degree of support around 1.2950 in the short term charts, suggesting a temporary low may be in for now. Broader price patterns look bearish still, however, and we expect upside potential to remain contained. We spot resistance at 1.3015/20 intraday and stronger resistance at 1.3100. We still rather think the GBP is prone to renewed softness in the medium term after failing to progress through major retracement resistance in the low 1.33s in recent weeks”.