GBP/USD likely to navigate within 1.3150/1.3350 near term – UOB

In view of FX Strategists at UOB Group, Cable is expected to extend the consolidative theme between 1.3150 and 1.3350 in the short-term horizon.

Key Quotes

24-hour view: “We highlighted the downside risk in GBP yesterday but were of the view that “a clear break below 1.3150 would come as a surprise”. GBP dropped to a low of 1.3181 before rebounding to hit an overnight high of 1.3244. The subsequent rapid drop from the high is gaining momentum and from here, a dip below the 1.3150 support seems likely. That said, there is another support at 1.3100 and at this stage, we do not expect this level to be threatened. Overall, only a move back above 1.3215 would indicate that the current downward pressure has eased (next resistance is at the high near 1.3245)”.

Next 1-3 weeks: “GBP traded sideways yesterday and closed little changed in NY (1.3206, +0.01%). The quiet price action offers no further clues and we continue to view the current movement as part of a 1.3150/1.3350 consolidation range. Looking further out, there is a slight downside bias but even if there is break of the 1.3150 support, we do not expect the strong 1.3040/50 support zone to be seriously threatened, at least not for the next couple of weeks (note that there is another strong support at 1.3100)”.