According to economists at Scotiabank, GBP/USD is seeing slight gains, but the loss of support at the 1.2600s level suggests a downward trend for Cable.
The previously held support at 1.2600/1.2605 is now seen as significant resistance.
The breach of the 1.2600 support, which has been a crucial trading range base for GBP since mid-December, indicates a negative technical outlook for the Pound.
While Tuesday’s trading shows a slight upward movement, it appears to be a consolidation phase before potential renewed weakness, resembling a bear flag pattern on the intraday chart.
GBP may find some support around 1.2535 in the short term, but the overall risk indicates a possible decline back to the low 1.2400s.
The resistance levels at the former support of 1.2600/1.2605 are now considered crucial.