GBP/USD: Diminishing bets for a deeper pullback – UOB

The probable move to sub-1.2850 levels appears to have lost some momentum in Cable, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP traded between 1.2895 and 1.2968 yesterday, relatively close to our expected sideway-trading range of 1.2885/1.2965. The daily closing in NY is on the firm side (1.2957, +0.36%) and from here, GBP could edge upwards and test the strong resistance at 1.2980 (next resistance is at 1.3000). For today, a clear break of 1.2980 appears unlikely. Support is at 1.2930 but only a move below 1.2910 would indicate the current mild upward pressure has eased.”

Next 1-3 weeks: “After breaking the 1.2900 support last Friday (07 Feb), GBP has not been able to make much headway on the downside. The relatively strong bounce of +0.36% (NY close of 1.2957) yesterday has resulted in a rapid loss in downward momentum. In other words, the risk of a break of 1.2850 has diminished. However, only a move above 1.2980 (no change in ‘strong resistance’ level) would indicate the current weakness has stabilized. Meanwhile, in order to rejuvenate the flagging momentum, GBP has to move and stay below 1.2910 within these few days or a break of 1.2980 would not be surprising.”