In the opinion of UOB Group currency strategists, GBP / USD risks a deeper pullback breaks 1.3780 In the next weeks.
Key Comments:
24 hour view: “Yesterday we held the view that there is room for the British pound to ‘test 1.3780 first before a recovery can be expected.’ Our expectation did not materialize as GBP / USD moved between 1.3819 and 1.3877. The underlying tone has slightly improved and this could lead to sterling testing 1.3895 first before declining. Next resistance at 1.3930 is not expected to enter the scene. Support is at 1.3830 followed by 1.3800 “.
Next 1-3 weeks: “There is not much to add to our update yesterday (March 22, GBP / USD at 1.3840). As highlighted, ‘momentum to the downside is starting to improve, but GBP / USD has to close below the monthly low of 1.3780 before a sustained decline can be expected.’ Right now, the outlook for such a move is not high, but it would rise unless GBP / USD can move above 1.3930 in these few days. Looking ahead, the next support level to note below 1.3780 is at 1.3700 “.
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