UOB Group currency strategists suggest that the GBP / USD pair could now move into a consolidation phase between 1.3860 and 1.4070 In the next weeks.
Key Comments:
24 hour view: “We highlighted yesterday that GBP / USD ‘could fall below last week’s low of 1.3890’. We added, ‘in view of lackluster momentum, any further decline is unlikely to threaten the main support at 1.3850.’ I was wrong as the pair subsequently fell to 1.3860. That said, we do not anticipate the strong rebound from the low (prior day high 1.3975). The rebound has room to extend, but any further advance is likely to be limited to a 1.3995 test. Next resistance at 1.4035 is unlikely to enter the picture. Support is at 1.3925 followed by 1.3890 “.
Next 1-3 weeks: “On Monday (Mar 1, GBP / USD at 1.3975), we held the view that GBP / US is ‘in a corrective pullback’ and ‘any weakness is likely to be capped at 1.3850’. While GBP / US fell as expected, it rallied strongly after hitting 1.3860 yesterday. The bearish momentum has more or less dissipated and the pair could trade between 1.3860 and 1.4070 for now. “
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