GBP/USD neutral below 1.3225 – UOB

FX Strategists at UOB Group noted Cable’s outlook should shift to bearish from the current neutral on a daily close below 1.3225.

Key Quotes

24-hour view: “The sharp decline in GBP yesterday was unexpected. While the drop appears to be running ahead of itself, there is no sign of stabilization just yet and another push lower towards 1.3225/30 would not be surprising. At this this stage, the odds for a sustained move below this level are not high (next support is further down at 1.3160). On the upside, 1.3355 is likely strong enough to cap any intraday recovery (minor resistance is at 1.3315)”.

Next 1-3 weeks: “While we have held the view that the pull-back in GBP has “room to extend lower to 1.3265/70” since last Thursday, the pace of decline since then has been more rapid than anticipated. From here, a NY closing below the 1.3225 would indicate that GBP has moved into a bearish phase (with an immediate target of 1.3100). This scenario would not be surprising unless GBP can move and stay above 1.3355 within these 1 to 2 days”.