In the opinion of the currency strategists at UOB Group, the GBP / USD is now seen trading within the 1.3735-1.3900 range In the next weeks.
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24 hour view: “Yesterday, we had the opinion that GBP / USD ‘could move higher, but a clear breakout of 1.3930 is unlikely.’ However, GBP / USD only rose to 1.3905 before falling sharply to a low of 1.3800 during New York hours Despite the rapid decline, the downside momentum has not improved as much. From here on, GBP / USD could drop to 1.3775, but the main support at 1.3735 is not expected to be threatened. Resistance is at 1.3830, but only a breakout of 1.3860 would indicate that the current mild pressure to the downside has eased. “
Next 1-3 weeks: “On Monday (July 12, GBP / USD at 1.3895), we indicated that ‘risk has shifted higher and GBP / USD could advance to 1.3960’. We emphasize that ‘upside risk is considered intact as long as GBP / USD does not move below the ‘strong support’ level at 1.3800. ‘The pair fell sharply to 1.3800 during yesterday’s session (July 13) and although 1.3800 is intact, the rapid loss of momentum has invalidated our opinion. Short-term downside momentum has improved somewhat, but it is too early to expect the start of a sustained decline in GBP / USD. From here, GBP / USD is more likely to trade between 1.3735 and 1.3900 for a period of time. Looking ahead, the decline appears to be more ‘vulnerable’, but GBP / USD has to close below 1.3735 before a period of sustained weakness can be expected. “
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