GBP/USD: Weakness over? – UOB

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD seems to have now moved into a consolidative phase.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the rebound amidst oversold conditions suggest that the weakness in GBP has stabilized’. We added, ‘GBP is unlikely to weaken further’ and we expected GBP to ‘trade between 1.1870 and 1.1980’. However, GBP soared to a high of 1.2030 before closing on a firm note at 1.2027 (+0.88%). While the rapid rise appears to be running ahead of itself, GBP could advance to 1.2065 first before a pullback is likely. GBP is unlikely to challenge the next resistance at 1.2130. Support is at 1.1985 followed by 1.1940.”

Next 1-3 weeks: “We turned negative in GBP last Wednesday (29 Jun, spot at 1.2185). After declining for more than a week, GBP rebounded strongly yesterday (07 Jul) as it rose to a high of 1.2030. While our ‘strong resistance’ level at 1.2030 was not clearly breached (NY high of 1.2030), downward pressure has more or less dissipated. In other words, the GBP weakness has run its course. The current movement is likely the early stages of a consolidation phase and GBP is likely to trade between 1.1900 and 1.2165 for now.”