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FX Strategists at UOB Group noted that odds for further retracement in the pair are losing traction.

Key Quotes

24-hour view: “We highlighted yesterday “downward momentum has not improved all that much” and added, “any weakness could be limited to a test of the 1.2900 support”. GBP subsequently touched a low of 1.2922 before staging a surprisingly sharp and strong rebound that took out several strong resistance levels with ease (NY high of 1.3041). The rebound appears to be running ahead of itself and while a test of the next strong resistance at 1.3050 is not ruled out, a sustained move above this level seems unlikely (next resistance is at 1.3080). Support is at 1.2995 but only a break of 1.2965 would indicate that the current upward pressure has eased”.

Next 1-3 weeks: “The 1.2900 level indicated in recent updates remain out of reach as GBP staged a sudden and strong surge from a low of 1.2922. The sharp up-move hit an overnight high of 1.3041. The high was not far from the 1.3050 ‘key resistance’ and as indicated previously, a break of the ‘key resistance’ would suggest that GBP has found a short-term bottom. From here, the odds for further GBP weakness have clearly diminished unless GBP can move and stay below 1.2965 within these 1 to 2 days. Looking ahead, a break of 1.3050 would not change the current neutral outlook but suggests GBP would likely trade sideways at a higher range”.