FX Strategists at Scotiabank stay neutral on Cable for the time being.
Key Quotes
“Sterling has weathered the overnight tariff “storm” relatively well and is trading little changed overall from levels seen late yesterday… It helps also that GBP sentiment was already beaten up by domestic political developments. PM May’s position remains delicate but, with two weeks of the current parliamentary session to go until recess, a push to remove her now remains a very low risk, we think. A bigger challenge will come in Oct, when she will have to try and move Brexit legislation through parliament. In the meantime, investors can perhaps focus a little more on the bounce in the UK economy and the potential for an Aug rate increase by the BoE”.
“Cable looks soft but the USD is not really pressuring the GBP to new lows, even in the short run. Unless early North American trade makes a run for the lows seen earlier this week between 1.3200/25, the pound may be able to stabilize and improve. Resistance is 1.3295/00 (40-day MA at 1.3298)”.
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