GBP/USD moved into further rangebound near term – UOB

FX Strategists at UOB Group suggested Cable should remain sidelined for the time being.

Key Quotes

24-hour view: “GBP attempted to move higher yesterday but 1.4100 once again checked the advance (high of 1.4098). The subsequent sharp sell-off from the top came as a surprise as GBP broke below the strong 1.4000 support to hit an overnight low of 1.3965. The rapid drop appears to be running ahead of itself and while a retest of the overnight low is not ruled out, a sustained move below this level seems unlikely (next support is at 1.3930). Resistance is at 1.4035 followed by 1.4070. Further up, 1.4100 is acting as a very strong resistance and is not expected to come into picture”.

Next 1-3 weeks: “In recent updates, we highlighted that “GBP has to move and stay above 1.4100 soon or the odds for a move to 1.4280 would diminish further”. While the failure to break above 1.4100 is not exactly unexpected (high of 1.4098 yesterday), the subsequent sharp sell-off that hit an overnight low of 1.3965 came as a surprise. From here, further weakness is not ruled out but we view any down-move as part of a 1.3930/1.4100 consolidation range and not the start of a sustained decline. In other words, the recent mild upward pressure has eased and GBP has likely moved into a sideways trading mode from here”.