UOB Group currency strategists now look to the GBP / USD within the range of 1.4100 to 1.4200 In the next weeks.
Key Comments:
24 hour view: “Our expectation that the sterling rally ‘will test 1.4235 first before a pullback’ was incorrect as it rose to 1.4200 before selling sharply to a low of 1.4100 the day before. Despite the relatively steep decline, the Momentum to the downside has not improved much. That said, the slide could drop to 1.4075 first before stabilizing. Next support at 1.4040 is unlikely to be threatened. Resistance is at 1.4150 followed by 1.4175 “.
Next 1-3 weeks: “We have had a positive view on the GBP since the beginning of last week. Yesterday (May 19, GBP / USD at 1.4195), we highlighted that ‘a break out of the main resistance at 1.4235 would shift focus to 1.4290’. The strong fell during the American session that caused the GBP / USD to fall to 1.4100 was a surprise. The 1.4100 level is our ‘strong support’ and although it has not yet been clearly broken, the rapid loss of momentum indicates that the positive phase has come to an end. From here, the British pound is considered to have moved into a consolidation and could move within a wide range of 1.4000 / 1.4200 over a period of time. “
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