GBP/USD bearish fundamentally and technically - Scotiabank

Eric Theoret, Strategist at Scotiabank noted a bearish perspective for GBP/USD from both technical and fundamental perspectives, and sees limited support ahead of 1.25.

Key quotes

“GBP is underperforming most of the G10 currencies with the exception of AUD and CHF, weakening into the NA open with a break through Wednesday’s fresh multi-decade lows under 1.27.” 

“The outlook for relative central bank policy remains bearish for GBP as the BoE’s dovish stance is juxtaposed against a tentatively hawkish Fed. Yield spreads are weighing on GBP and options markets hint to considerable demand for protection against downside risk. Brexit uncertainty is delivering added pressure via sentiment. “

“GBPUSD short-term technicals: bearish—GBP has broken to fresh lows, with limited support ahead of 1.25 and no significant technical support ahead of 1.05. Momentum signals are bearish and the RSI is at the oversold threshold around 30. DMI’s are providing confirmation and moving averages are bearishly aligned.”