GBP/USD short-term technicals look neutral/bearish - Scotiabank

Choppy trading over the New Year period has flattened out the technical picture for the GBP in the short run but the broader technical message remains bearish, said Shaun Osborne, Strategist at Scotiabank.

Key Quotes

“Sterling firmed on evidence that the UK manufacturing sector picked up markedly last month; the Dec PMI rose to 56.1, well above expectations of a 53.3 reading, to reach the highest level since 2014. The weaker GBP may be lifting manufacturing exports but the picture painted by the latest PMI data is not entirely consistent with other signals from the manufacturing sector though Q4 and caution remains warranted on economic prospects, we think.”

“GBPUSD short-term technicals: neutral/bearish – Choppy trading over the New Year period has flattened out the technical picture for the GBP in the short run but the broader technical message remains bearish. Intraday patterns look mildly positive for the GBP, suggesting some risk of a push back above the 1.23 area. However, we think a generally bearish trend backdrop implies only limited scope for GBP gains at the moment and we look for firm resistance in the 1.2380/90 area.”