GBP/USD moved into a consolidative phase – UOB

Cable is now poised to navigate within the 1.3800-1.4000 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the swift and sharp drop appears to be running ahead of itself but there is no sign of stabilization just yet’. We added, GBP ‘could test the support at 1.3790 first before stabilization can be expected’. GBP subsequently dropped to 1.3803 before staging a surprisingly sharp and robust rebound (high has been 1.3931). Despite the strong bounce, upward momentum has not improved by as much. That said, GBP could edge higher but a sustained advance above the resistance at 1.3950 is unlikely. Support is at 1.3880 followed by 1.3845.”

Next 1-3 weeks: “Yesterday (03 May, spot at 1.3820), we held the view that ‘the sudden and sharp drop in GBP has scope to extend to 1.3750’. Our view was proven wrong quickly as GBP rebounded sharply and took out our ‘strong resistance’ level at 1.3910 (high of 1.3931). The sharp and rapid swings have resulted in a mixed outlook and GBP is likely to trade between 1.3800 and 1.4000 for now.”