GBP/USD: Potential for a drop back to 1.2370/1.2380 on a break under 1.2600 – Scotiabank

GBP/USD recovers its early losses but may struggle to extend, economists at Scotiabank report

1.2600 is key support

Solid Sterling gains from the daily low just under 1.27 cast a positive light on near-term price action but there has been little follow through demand through the low 1.27s and broader trading patterns still lean somewhat bearish for the Pound’s outlook. 

A flat trading range that developed over the past month above 1.26 might yet develop into a bearish Head & Shoulders reversal (bearish on a break under 1.2600 for a drop back to 1.2370/1.2380). 

Intraday resistance is 1.2760/1.2770. Support is 1.2690.