GBP/USD now faces some consolidation – UOB

Cable is likely to move within the 1.2280-1.2480 range in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “We noted the ‘oversold conditions and slowing momentum’ yesterday and expected GBP ‘to consolidate between 1.2250 and 1.2365’. GBP dipped to a low of 1.2258 before staging a surprisingly strong and sharp rebound that hit an overnight high of 1.2402. The rapid advance appears to be running ahead of itself but is not showing any sign of weakness just yet. From here, GBP could edge above the overnight high but any advance is viewed as part of a higher trading range of 1.2335/1.2430 (a sustained move above 1.2430 is not expected).”

Next 1-3 weeks: “After dropping sharply for a few days in a row, the sudden and sharp bounce in GBP yesterday came as a surprise. The rebound edge above our 1.2400 ‘strong resistance’ level (high of 1.2402) and the weak phase that started last week is deemed to have run its course. The current movement in GBP is likely the early stages of a consolidation phase. For the next week or so, GBP is expected to trade sideways, likely between 1.2280 and 1.2480.”