GBPUSD now faces some consolidation near term – UOB

In light of the recent price action, GBPUSD could now attempt some consolidation in the short term, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘is unlikely to strengthen further’ and we expected it to ‘trade sideways between 1.1800 and 1.1950’. GBP subsequently traded within a narrower range than expected (1.1834/1.1942). The underlying tone has firmed somewhat and GBP could edge higher today. However, any advance is likely limited to a test of 1.1970. Tuesday’s high at 1.2027 is not expected to come under challenge. Support is at 1.1850, but only a break of 1.1800 would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “Yesterday (16 Nov, spot at 1.1880), we indicated that GBP could consolidate for a couple of days first before making another push higher. We added, “the chance for a clear break of the next major resistance at 1.2100 does not appear to be high now”. There is no change in our view. It is worth noting that 1.2027 is already a rather solid resistance level. On the downside, a break of 1.1750 (no change in ‘strong support’ level from yesterday) would indicate that the rally in GBP is ready to take a breather.”