He GBP / USD must stay above 1.3725 to allow a move to the 1.3800 level in the coming weeks, have noted the currency strategists of UOB Group.
Key Comments:
24 hour vision: “Our expectation that GBP / USD ‘break 1.3760’ was incorrect as it fell sharply to 1.3636 before bouncing to close at 1.3682 (-0.39%). The rapid decline appears to be ahead of itself, and further weakness seems unlikely. GBP / USD is more likely to consolidate and move sideways between 1.3640 and 1.3725 “.
Next 1-3 weeks: “Last Friday (Jan 22, GBP / USD at 1.3735), we noted that ‘bullish momentum has improved’ and we held the view that ‘GBP / USD is likely to strengthen towards 1.3800’. The subsequent rapid decline to a low of 1.3638 was a surprise. While our ‘strong support’ level at 1.3630 is still intact, the bullish momentum has narrowed. In order to rejuvenate the weakened momentum, GBP / USD has to move and sustain above 1.3725 within these 1 or 2 days or the odds of a move to 1.3800 would decline rapidly. Conversely, a breakout of 1.3630 would indicate that GBP / USD could trade sideways for a while. “
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