GBP/USD upside to 1.3050 losses momentum – UOB

In view of FX Strategists at UOB Group, Cable’s potential test of the mid-1.3000s seems to have lost some momentum.

Key Quotes

“The year-to-date high of 1.3045/50 remains intact as GBP dropped sharply from a high of 1.3025. The recent strong upward momentum has been severely dented and from here, a push below the overnight low of 1.2932 would not be surprising. That said, any further weakness is unlikely to move significantly below the next support at 1.2895”.

“GBP unexpectedly dropped to an overnight low of 1.2932, several pips above the stop-loss for our bullish view at 1.2925. When we turned bullish last Thursday, 29 Jun 17 (spot at 1.2935) we were of the view that the sharp rally was over-extended but there is room for extension to the year-to-date high of near 1.3045/50. The high last Friday was 1.3030 and the rapid pullback from the top does not bode well for further GBP strength. A move below 1.2925 would indicate that an interim top is in place and that GBP has moved into a consolidation phase. Until then, another push higher is not ruled out but the odds for extension to 1.3045/50 have clearly diminished”.