GBP/USD neutral now, odds for further gains are improving – UOB

Cable’s outlook stays neutral for the time being, although further upside still remains on the cards, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected a higher GBP yesterday, we were of the view that a clear break of 1.4260 is unlikely. The anticipated GBP strength exceeded our expectation by surging to a high of 1.4279. With no sign of weakness just yet, there is room for further advance even though last week’s peak of 1.4346 is unlikely to come under serious threat (minor resistance at 1.4310). Support is at 1.4220 but only a move back below 1.4190 would indicate that the immediate upward pressure has eased”.

Next 1-3 weeks: “The recovery from the 1.3980 low seen on Tuesday (30 Jan) extended further as GBP closed higher for the third straight day yesterday. The overnight high has been 1.4279, which is just below the top of our previously expected 1.3930/1.4290 consolidation phase. While upward momentum has picked up, it is too early to expect a resumption of the recent bullish phase. Last week’s peak at 1.4346 is acting as a solid resistance and only a NY closing above this level would indicate the start of a fresh bullish phase. The odds for such a move are not high at this stage but would continue to improve as long as GBP can hold above 1.4140 in the next few days”.