GBP / USD still looks within the 1.3580-1.3760 range for the next few weeks, suggest currency strategists at UOB Group.
Key Comments:
24 hour view: “Last Friday we highlighted that ‘there is scope for GBP / USD to first test 1.3710 before a pullback can be expected.’ We added, ‘main resistance at 1.3760 is unlikely to enter the picture.’ The subsequent advance was more robust than expected as GBP / USD rallied to 1.3740 before settling in a firm tone at 1.3736. While the bullish momentum has not improved much, GBP / USD could break above the 1.3760 level but is unlikely to break. produce a sustained break above this level (next resistance is at 1.3800). On the downside, a break of 1.3690 (minor support at 1.3710) would indicate that the current upward pressure has eased. “
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 of 1.3580 to 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 do not anticipate the drop to 1.3566 on February 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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