UOB Group currency strategists have highlighted that a sustained decline below 1.3580 in GBP / USD looks unlikely on the short-term horizon.
Key Comments:
24 hour view: GBP / USD fell to 1.3566 yesterday, before making a strong bounce that sent it back to 1.3698. The strong and rapid advance is overbought, but there is scope for GBP / USD to test 1.3710 first before a pullback can be expected. For today, the main resistance at 1.3760 is unlikely to enter the picture. Support is at 1.3645, followed by 1.3610 “.
Next 1-3 weeks: “We have held the same opinion since last Thursday (Jan 28, GBP / USD at 1.3665) where we highlight that ‘the bias is tilted to the downside but any weakness is considered part of a range between 1.3580 and 1.3760’. We expected GBP / USD to move lower, but we are of the opinion that ‘a sustained decline below 1.3580 is unlikely’. However, we did not expect the drop to 1.3566 yesterday (Feb 4) and the subsequent sharp rebound. Price action has clouded the outlook and only a clear break (daily close) below 1.3580 or above 1.3760 would indicate that GBP / USD is poised for a sustained directional move. “
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