A likely move to 1.3800 in GBP/USD to be losing momentum in the short term, currency strategists at UOB Group suggest.
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24 hour view: “We noted last Friday that ‘upward momentum is starting to ease and this coupled with still overbought conditions suggest GBP/USD is likely to consolidate within a 1.3680/1.3740 range’. We did not expect the sharp drop at 1.3654 during the New York session.The rapid decline appears to be overdone and GBP/USD is unlikely to weaken much further.For today, GBP/USD is more likely to move sideways at these lower levels. It is expected to be between 1.3650 and 1.3715.”
Next 1-3 weeks: “We have held a positive view on GBP/USD for over a week now. As GBP/USD rallied, in our latest narrative last Friday (Jan 14, GBP/USD at 1.3710), we highlighted that ‘although there is still room for GBP/USD to advance further, next resistance at 1.3800 may not come into the picture so soon’ We added that ‘a break of 1.3640 would signal GBP/USD strength is over’ That being said, no we expected the sharp pullback during the New York session which touched a low of 1.3654.Moment to the upside has subsided and this along with overbought conditions suggests that 1.3800 is likely out of reach.Only a break of 1.3800 however 1.3640 (no change in “strong support” level) would indicate that GBP/USD is unlikely to strengthen further.”
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