GBP / USD needs to close above 1.4235 to reignite another positive phase, in the opinion of UOB Group currency strategists.
Key Comments:
24 hour view: “Our expectation that GBP / USD ‘will drop to 1.4075 first before stabilizing’ did not materialize. Instead, the British pound rallied to a high of 1.4192 the day before. Despite the relatively strong rally, the bullish momentum hasn’t improved much. However, there is scope for GBP / USD to test Tuesday’s high at 1.4220. For today, a sustained rise above this level is unlikely (there is another strong resistance at 1.4235). The current slight upward pressure is considered intact as long as GBP / USD does not dip below 1.4130 (minor support at 1.4150) ”.
Next 1-3 weeks: “Yesterday (May 20, GBP / USDD at 1.4115), we held the view that the recent positive phase in GBP / USD is over and we expected the pair to ‘trade within a wide range of 1.4000 / 1.4200’. We highly anticipate the subsequent rapid rebound as GBP / USD rose to 1.4192 during the American session. Despite the rally, it is too early to expect GBP / USD to move into a new positive phase. The pair has to close above 1.4235 before a move to 1.4290 can be expected. Right now, the outlook for the British pound to move clearly above 1.4235 is not high, but it would remain intact as long as GBP / USD does not move below 1.4100 these two days. “
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