GBP/USD outlook neutral/bullish – Scotiabank

Chief FX Strategist at Scotiabank Shaun Osborne sees the possibility of Cable advancing to the 1.31 area.

Key Quotes

“Sterling gained sharply on the back of PM May’s early election call yesterday but gains have moderated somewhat through the overnight market. We think short-covering provided the essential drive behind the GBP rally as we do not expect an early election to diminish Brexit risks significantly. The Prime Minister is aiming to strengthen her hand with the early vote, making a “hard Brexit” more, rather than less, likely. We think the GBP pop on the election call is overdone”.

“Cable has consolidated yesterday’s gains after breaking out of the broader, sideways range that has prevailed since late last year. Cable is testing major resistance around 1.2820, the initial lows see after the Jun drop in the pound. Technically, a sustained move above 1.2820 (daily close basis) could see the pound’s rally extend to the 1.31 area. Oscillator studies are shifting to a more GBP-positive position”.