GBP/USD is struggling a little after another failure at 1.2850 late last week. Economists at Scotiabank analyze the pair’s technical outlook.

A major top might be developing

A handful of tests of the 1.2850 area have been easily rejected and intraday losses suggest another is developing today on the chart. 

A major top might be developing but will only come in to play if the Pound eases below key support at 1.2590 at this point. 

Given still strong trend dynamics, an alternative scenario is that losses are limited (to the mid/upper 1.27s) and the Pound’s rally pushes on to new cycle highs shortly.