GBP/USD now moved into a consolidative phase – UOB

Cable is now seen navigating within the 1.3750-1.3950 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden and sharp sell-off in GBP came as a surprise (we were expecting GBP to trade sideways). Downward momentum is relatively robust and GBP could decline further but oversold conditions could ‘limit’ any weakness to a test of 1.3795. The next support at 1.3750 is unlikely to come into the picture. Resistance is at 1.3875 followed by 1.3900. A break of 1.3900 would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Our latest narrative was from Tuesday (20 Apr, spot at 1.3990) where we indicated that GBP ‘could advance further even though the next major resistance at 1.4100 may not come into the picture so soon’. The sharp drop yesterday (22 Apr) that cracked our ‘strong support’ level at 1.3850 came as a surprise (low of 1.3825). The break of the ‘strong support’ indicates that the GBP strength that started one week ago has topped out at 1.4009. The current movement is viewed as the early stages of a consolidation phase and GBP is expected to trade between 1.3750 and 1.3950 for now.”