GBP/USD: cautious regarding scope for further strength - Scotiabank

With odds of a ‘Bremain’ growing ahead of Thursday's referendum, GBP appears to have already captured the bulk of the benefit from this most recent turn in sentiment, said Eric Theoret, FX Strategist at Scotiabank, as he notes they remain cautious with regards to the scope for further strength from current levels.

Key Quotes

“GBP rose to test fresh multi-month highs at the upper end of its year-to-date range, with Tuesday’s strength observed from the European open. Sentiment is dominant, as we note the continued rise in odds favoring a ‘Remain’ result for Thursday’s referendum on EU membership—climbing above 80% for the first time since late May.”

“GBP appears to have already captured the bulk of the benefit from this most recent turn in sentiment and we are cautious with regards to the scope for further strength from current levels.”

“GBP/USD short-term technicals: bullish-neutral—GBP is struggling to sustain its gains above the 200 day MA (1.4684) and appears set to form a doji candle of uncertainty just above 1.47. We note the short-lived test of resistance near 1.4780 and the failure to sustain gains above 1.4750. Near-term support is expected at 1.4650.”