Further rangebound expected around – UOB

FX Strategists at UOB Group reiterate they expect the GBP/USD to trade within the familiar broad range.

• "24-hour view: GBP traded between 1.2897 and 1.2949 yesterday, narrower than our expected sideway-trading range of 1.2885/1.2955. The underlying tone has firmed somewhat and this would likely translate into a test of 1.2980. For today, a sustained rise above this level is not expected (next resistance is at 1.3000 followed closely by last month’s top at 1.3012). Support is at 1.2920 but the stronger level is closer to 1.2900.
• Next 1-3 weeks: Despite big moves in other major currency pairs, GBP traded in a relatively quiet manner yesterday and ended the day little changed. The price action offers no fresh clues and the outlook for GBP remains mixed. In other words, there is no change to our view wherein GBP ‘could trade sideways within a broad range for a while more’ (same view since last Tuesday, 26 Nov, spot at 1.2900). From here, a 1.2840/1.3012 range (narrowed from 1.2770/1.3012 previously) is likely enough to contain the movement in GBP, at least for the next few days. Looking forward, the current consolidation is likely to be resolved by GBP moving above last month’s peak at 1.3012”.