GBP/USD short-term technicals remain bearish - Commerzbank

After BoE latest easing measures, GBP will struggle to rise significantly on good data and is liable to weaken more on poor reports, said Shaun Osborne, Chief FX Strategist at Scotiabank, while noting technical patterns point to a bearish continuation.

Key Quotes

“Sterling is facing a raft of data reports this week – industrial production, trade, RICS house prices and construction output – though most of the numbers pre-date the referendum. The BRC retail sales data doesn’t usually get much of a look in but given the interest in the post-Brexit environment, tonight’s data for July (expected -0.7% y/y, from -0.5% in June), may get a little more attention.”

“Overall, however, the data will struggle to detract from the clear easing bias still in play at the Bank of England after the robust easing measures announced last week. Sterling will struggle to rise significantly on good data and is liable to weaken more on poor reports.”

“GBP/USD short-term technicals: bearish—We think weak price action overall for the GBP last week has broken the month-long consolidation in the markets that followed the late June sell-off. GBP/USD broke out on the downside of the triangular consolidation in place over the past month and closed poorly on the week as well – effectively calling time on the sideways movement in the market. We see resistance now in the low 1.31 area and immediate risk to the low 1.27s.”