GBP/USD now seen within 1.3640-1.3850 – UOB

Cable appears to have moved into a consolidative phase, likely between 1.3640 and 1.3850 in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we noted yesterday that ‘downward pressure appears to have eased and GBP is unlikely to weaken much further’, we did not expect the manner by which GBP lifted off and soared to 1.3732. The rapid rise appears to be overdone but there is room for GBP to test 1.3765 first before easing off. The next resistance at 1.3800 is unlikely to come into the picture. Support is at 1.3695 followed by 1.3670.”

Next 1-3 weeks: “We turned negative GBP last Wednesday (18 Aug, spot at 1.3745) and in our latest narrative from Friday, we expected GBP to ‘decline further’. We highlighted that ‘the next major support is at July’s low near 1.3575’. We did not anticipate the sharp bounce in GBP yesterday that took out our ‘strong resistance’ level at 1.3710 (high of 1.3732). The break of the ‘strong resistance’ indicates that the weakness in GBP has come to an end. Despite the sharp bounce, it is too early to expect GBP to advance in a sustained manner. From here, GBP is more likely to consolidate and trade between 1.3640 and 1.3850 for a period of time.”