GBP/USD points to extra consolidation – UOB

Cable is expected to navigate within a consolidative theme in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP rebounded to 1.2276 before dropping quickly to move below last week’s 1.2266 low (overnight low of 1.2256). Downward momentum has picked up, albeit not by much. From here, there is a near-by support at 1.2240 and while GBP dip below this level, the next support at 1.2200 is likely out of reach. Overall, GBP has to move back above 1.2325 (minor resistance is at 1.2300) in order to indicate that the current downward pressure has eased.”

Next 1-3 weeks: “We highlighted last Friday (08 May, spot at 1.2390) that ‘1.2644 could be a short-term top’ but held the view that ‘it is too early to expect a sustained decline’. We added, GBP ‘is more likely to consolidate and trade between 1.2280 and 1.2500’. The rapid manner by which GBP is approaching the bottom of the range at 1.2280 (overnight low of 1.2283) is not exactly expected. The price action has resulted in a quick pick-up in momentum and from here, if GBP posts a NY closing below 1.2240, it would indicate the start of a sustained down-move (that potentially could move below last month’s 1.2166 low). At this stage, the prospect for such a move is not that high but it would continue to improve as long as GBP does not move above 1.2410 within these 1 to 2 days.”