In the opinion of the currency strategists at UOB Group, the outlook for GBP / USD remains neutral on the short-term horizon.
Key Comments:
24 hour view: “Yesterday we highlighted that ‘the strong rebound has room to test the main resistance at 1.4020’. We added, ‘in view of the overbought conditions, the British pound may not be able to maintain a support point above this level (the minor resistance is at 1.4000). ‘Our expectation did not materialize as GBP / USD rose to 1.4001, fell sharply to 1.3897 before bouncing to end the day at 1.3932 (-0.27%). The downside momentum has improved by a little and the bias is tilting lower. That said, any weakness is likely to be limited to a test of 1.3880. Next support at 1.3850 is unlikely to enter the scene. Resistance is at 1.3950 followed by 1.3980 “.
Next 1-3 weeks: “Yesterday (March 18, GBP / USD at 1.3970), we highlighted that ‘bullish momentum is starting to improve, but GBP / USD has to close above 1.4050 before a sustained advance can be expected.’ “The odds of a sustained advance are not high for now, but would remain intact as long as GBP / USD does not move below 1.3880.” We do not anticipate how quickly the British pound gave up most of its gains from the previous day (GBP / USD fell to a low of 1.3897). While 1.3880 is still intact, the buildup of bullish momentum has faded. The outlook for the British pound is now neutral and is likely to trade between 1.3810 and 1.4010 “.
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