GBP/USD: A move to 1.2165 remains on the cards – UOB

Cable keeps the neutral stance but does not rule out a move to the 1.2165 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “After dropping sharply to 1.2248 on Tuesday (21 Apr), the rapid and robust rebound in GBP that hit a high of 1.2386 was unexpected. Despite the swift pull-back from the high, it is too soon to expect GBP to move lower in a sustained manner. For today, GBP is likely to consolidate and trade between 1.2280 and 1.2380.”

Next 1-3 weeks: “We highlighted last Thursday (16 Apr, spot at 1.2500) that GBP has posted a short-term top at 1.2648. We expected GBP to ‘move lower’ but held the view that GBP is ‘unlikely to move clearly below 1.2300’. While we got the direction of the movement right, we did not anticipate the ease by which GBP plunged below 1.2300 yesterday (low of 1.2248). The previously lackluster momentum is given a strong boost and from here GBP could weaken further towards the month-to-date low near 1.2165. On the upside, only a move above 1.2420 (‘strong resistance’ level) would indicate the current downward pressure has eased.”