GBP/USD now moved to a correction phase – UOB

FX Strategists at UOB Group noted the negative phase around Cable appears to have ended.

Key Quotes

24-hour view: “GBP closed on firm note in NY yesterday (1.2767, +0.45%) but surged earlier this morning on further Brexit headlines. The rapid rebound appears to be running ahead of itself but there is scope for GBP to test 1.2890 first before the advance should ease off. Support is at 1.2790 followed by 1.2750″.

Next 1-3 weeks: “The ‘negative’ phase in GBP that started about 2 weeks ago (see update on 19 Oct, spot at 1.3020) ended abruptly as Brexit headlines sent GBP blasting past the ‘key resistance’ at 1.2820 (GBP hit a high of 1.2831 during NY hours and extended its gain earlier this morning when more Brexit headlines crossed the wires). The sudden surge in GBP came as a surprise as after the steep decline on Tuesday (30 Oct), we were of the view that GBP could break the year-to-date low of 1.2662. The strong recovery in GBP suggests the 1.2697 low seen on Tuesday is a short-term bottom and we do not expect this level to come into the picture, at least not for the next one week or so. Despite the robust rebound, it is premature to expect a major bullish reversal. GBP has likely moved into a ‘correction’ phase and the current recovery could extend higher but at this stage, any further advance is likely limited to 1.2950″.