GBP/USD: Likely to consolidate in a range between 1.3700 and 1.3780 – UOB Group
|Momentum indicators are turning flat; GBP is likely to consolidate in a range between 1.3700 and 1.3780. In the longer run, early signs of slowing momentum; GBP must break and hold above 1.3800 or the probability of further strength will diminish, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Early signs of slowing momentum
24-HOUR VIEW: "Yesterday, we expected GBP 'to edge higher and test the 1.3770 level.' We indicated that 'barring a surge in momentum, the major resistance at 1.3800 is probably out of reach.' Although GBP rose more than expected, it pulled back sharply from 1.3787 to close largely
unchanged at 1.3742 (+0.09%). Momentum indicators are turning flat. Today, instead of expecting a higher GBP, we expect it to consolidate in range between 1.3700 and 1.3780."
1-3 WEEKS VIEW: "We turned positive on GBP last Thursday. On Friday, we highlighted that 'the outlook for GBP remains positive, but it may consolidate for a couple of days first; the next technical objective is 1.3800.' Yesterday, GBP rose to a high of 1.3787 and then pulled back. There are early signs that upward momentum is beginning to slow. From here, GBP must break and hold above 1.3800 soon, or the probability of further GBP strength will diminish rapidly. Conversely, a breach of the ‘strong support’ at 1.3670 (level was at 1.3645 yesterday) would indicate that GBP has entered a range trading phase."
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