GBP/USD now faces further consolidation – UOB

In opinion of FX Strategists at UOB Group, GBP/USD is now expected to navigate between 1.3370 and 1.3560 in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘is unlikely to strengthen much further’ and expected it to ‘consolidate and trade between 1.3480 and 1.3550’. The sharp drop to a low of 1.3431 came a surprise. The subsequent rapid rebound from the low amidst oversold conditions indicates that GBP is unlikely to weaken further. For today, GBP is more likely to trade sideways between 1.3440 and 1.3520.”

Next 1-3 weeks: “We noted yesterday (03 Jan, spot at 1.3525) that the recent sharp rise appears to be overdone but there is room for GBP to advance further. We added, a breach of the ‘strong support’ at 1.3430 would indicate that the upward pressure has eased. During NY hours, GBP dropped sharply to within one pip of our ‘strong support’ (low of 1.3431). While the ‘strong support’ is not breached, upward pressure has more or less dissipated. The current movement is viewed as part of a consolidation phase and GBP is likely to trade between 1.3370 and 1.3560 for now.”