GBP/USD consolidation ahead of extra gains likely – UOB

In opinion of FX Strategists at UOB Group, Cable is now expected to move into consolidation ahead of further upside to the 1.4280 area.

Key Quotes

24-hour view: “Expectation for GBP to extend its recent gains was wrong as it plunged from a high of 1.4244 to a low of 1.4066 before swinging back higher to close at 1.4157. The sudden spurt of volatility is unexpected and has resulted in a mixed outlook for GBP. From here, further choppy price action is not ruled out but a move out of yesterday’s range seems unlikely. Overall, we expect GBP to trade within a relatively broad 1.4120/1.4240 range”.

Next 1-3 weeks: “GBP peeked above Monday’s 1.4242 top to touch 1.4244 yesterday before staging an impulsive decline that sliced through strong support levels with ease. The down-move was equally short-lived as GBP rebounded strongly from a low of 1.4066. Despite the volatile price action, we still detect a positive undertone even though after the move yesterday, GBP could consolidate for a few days first before attempting to move towards the February’s peak near 1.4280. However, the odds for further strength to the year’s high at 1.4346 have decreased considerably”.