GBP/USD consolidates after test of 1.27. Economists at Scotiabank analyze the pair’s outlook.

Broader bull trend intact

The BoE/Ipsos 12m inflation survey is released early Friday and may sway markets to some extent (expectations have been trending lower) but may not change the prospect of still higher policy rates in the UK – a key support for the GBP – to any significant extent.

Spot is consolidating, rather than reversing bearishly, and a solid bull trend continues to play out here on the face of it. 

Intraday gains through 1.2670 should put yesterday’s peak just under 1.27 within reach. Broader trends suggest a push on to major retracement resistance at 1.2760. 

Support is 1.2630 and 1.2595/00.