GBP/USD: Demand on weakness to or just below 1.27 should help limit losses in the near term – Scotiabank

GBP is trading 0.5% down on the USD. Economists at Scotiabank analyze Cable outlook.

Mild compression in spreads

Sterling losses reflect broader US gains, as well as some – moderate – compression in GBP-supportive yield, spreads over the USD on the day. 

Spot looks soft on the short-term chart but the intraday and daily patterns reflect firm demand for the Pound on weakness to or just below 1.27 late last week. That should help limit Cable losses in the near term. 

Support is 1.2670/75 and 1.2620/25. Resistance is 1.2785.