GBP/USD stays neutral, could re-test 1.2958 – UOB

FX Strategists at UOB Group remain neutral on Cable although they do not rule out another visit to the 1.2958 level in the near term.

Key Quotes

24-hour view: “The sharp plunge in GBP post-BOE announcement appears incomplete and further weakness still seems likely. However, the current decline is entering oversold territory and at this stage, the odds for a sustained break below last month’s 1.2958 low are not high (next support is at 1.2930). Only a break back above 1.3065 would indicate that the current weakness has stabilized (minor resistance is at 1.3040)”.

Next 1-3 weeks: “After trading quietly for a several days, GBP sprang to life after BOE’s announcement. The relatively large decline of -0.83% (NY close of 1.3017) suggests that GBP would stay under pressure, at least for the next one week or so. While a dip below last month’s 1.2958 low would not be surprising, we are seeing another major support at 1.2880 and at this stage, the odds for a sustained move below this level are not high. On the upside, only a break back above the 1.3100 ‘key resistance’ would indicate that the current downward pressure has eased”.