GBP/USD neutral, likely bottomed out near 1.2660 – UOB

FX Strategists at UOB Group remain neutral on the pair and noted it could have bottomed out in recent lows near 1.2660.

Key Quotes

24-hour view: “The relatively strong advance in GBP over the past few days appears to be running ahead of itself and further sustained up-move is not expected for now. That said, there is scope for another ‘push’ higher towards the major 1.2960 resistance but a clear break of this level would come as a surprise (next resistance is at 1.3000). On the downside, only a break of 1.2860 would indicate that the current upward pressure has eased (minor support is at 1.2885)”.

Next 1-3 weeks: “We shifted from a bearish to neutral stance on Tuesday (21 Aug, spot at 1.2795) and were of the view that GBP has found a bottom at 1.2662 last week. While we view the price action from the low as the early stages of a consolidation phase, we noted that “shorter-term indicators are on the positive side” and the immediate bias is for GBP to “probe the top of the expected 1.2700/1.2960 consolidation phase”. GBP subsequently hit a high of 1.2936 yesterday (22 Aug) and from here, we continue to see chance for the 1.2960 level to be ‘tested’. At this stage, the odds for a sustained break above this level are not high. Overall, we expect GBP to stay underpinned (at least for another 1 to 2 more days) and only a break of 1.2800 would indicate the current upward pressure has eased”.