GBP gains strongly from upper 1.28s on PMI beats – Scotiabank

UK PMI data for March were mixed. Manufacturing output weakened to 44.6 (from 46.9 and against forecasts for a rise to 47.2), Scotiabank's Chief FX Strategist Shaun Osborne notes.

Technicals look bullish

"Services and Composite data strengthened impressively and beat expectations, however. Strength in the service sector in particular suggests the economy may be picking up some renewed momentum after a period of stagnation. UK CPI data mid-week are expected to reflect still slow progress on cooling inflation, reinforcing the cautious pace of BoE easing we are likely to see in the months ahead, however."

"GBP gains are developing strongly on the session. A solid rebound from the upper 1.28s has pushed through Friday’s intraday peak after the pound earlier set a minor new low. Price is carving out a bullish outside range reversal, in effect, countering the bearish price action that developed late last week. Look for gains to extend to the low 1.30s. Resistance is 1.3015 and 1.3120."