GBP/USD: Gains through 1.2200 may trigger a squeeze to the 1.23 area – Scotiabank

Cable is soft but off earlier lows. Economists at Scotiabank analyze GBP/USD outlook.

Perhaps oversold in the short run

Cable price signals are reflecting a tentative and perhaps only short-term base for the GBP developing on intraday chart.

The GBP sell-off does look somewhat overextended so a minor relief rally would not be a surprise at this point.

Gains through 1.2200 intraday would be a minor positive for the GBP and perhaps trigger a squeeze to the 1.23 area where firmer short-term resistance should emerge.

Intraday support is 1.2160/1.2170. Broader risks are tilted towards a drop back to the 1.20/1.21 area.