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Analysts at Scotiabank noted the key data developments from the UK and argued that technicals are bearish for the pound.

Key Quotes:

“The UK Trade Balance data reflected a wider than expected shortfall for Aug (-GBP11.195bn) while Industrial Production rose a stronger than expected 0.2% M/M (despite weaker than expected manufacturing and construction output).”  

“Aug GDP was flat on the month but the 3m/3m comparison was strong at +0.7%, the strongest since early 2017.”

“Sterling is reflecting market faith in the UK and EU finding a way out of the current Brexit impasse.”

“We remain concerned that the disparate interests in the UK will make a compromise deal difficult to achieve.”

“GBP/USD short-term technicals: bearish – Sterling has performed much better than we expected over the past 24 hours.”

“More broadly, we continue to feel that Cable needs to trade well through the 1.33 to have any real, technical chance of extending towards 1.35/1.37 at the moment.”