GBP/USD now points to some consolidation – UOB

GBP/USD is now seen navigating the 1.1720-1.1930 range in the next few weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘downward momentum has waned a tad’ and we were of the view that GBP ‘could dip below the major support at 1.1730 but it is unlikely able to maintain a foothold below this level’. While GBP subsequently dipped below 1.1730 (low of 1.1718), the outsized bounce from the low came as a surprise (high has been 1.1878). The rebound appears to be running ahead of itself and GBP is unlikely to advance much further. For today, GBP is more likely to trade sideways within a range of 1.1760/1.1885.”

Next 1-3 weeks: “After GBP dropped to 1.1744, we highlighted yesterday (24 Aug, spot at 1.1765) that despite the decline, downward momentum has not improved by much. We held the view that there is scope for GBP to edge lower towards 1.1680. GBP subsequently dipped to 1.1718 before rebounding strongly to take out our ‘strong resistance’ at 1.1875 (high of 1.1878). The breach of the ‘strong resistance’ indicates that GBP is unlikely to weaken further. The current movement is viewed as part of a consolidation phase and GBP is likely to trade between 1.1720 and 1.1930 for now.”