In light of the recent price action, GBP / USD is still targeting the 1.3760 area in the coming weeks, say UOB Group currency strategists.
24 hour view: “We expected GBP / USD to strengthen further yesterday, but we are of the opinion that ‘it may not be able to sustain above last week’s high of 1.3703’. The pair subsequently rose to 1.3701 before rapidly reversing. While the pressure Bullish has eased, the decline from 1.3701 is considered part of a consolidation phase and not the beginning of a deeper pullback. In other words, GBP / USD is likely to move sideways today, and is expected to be within the 1.3600 / 1.3700 ”range.
Next 1-3 weeks: “Two days ago (Jan 11, GBP / USD at 1.3525), we highlighted that ‘a daily close below 1.3460 could lead to GBP / USD moving lower to 1.3400’. The pair subsequently fell to 1.3451 before making a surprisingly strong rally yesterday to a high of 1.3670. The prospect of weakness for the British pound has dissipated and although risk has moved higher, any advance is expected to face solid resistance at 1.3760. Overall, GBP / USD is expected to trade on a bullish bias with 1.3550 acting as a ‘strong support’ level. “