GBP/USD extra gains still on the cards – UOB

FX Strategists at UOB Group have not discarded extra gains in Cable in the short-term horizon.

Key Quotes

24-hour view: “GBP popped above the strong resistance highlighted at 1.4200 yesterday but the rally was checked by the next strong level at 1.4230. The sharp and rapid pull-back from a high of 1.4220 suggests that a short-term top is in place. From here, we expect GBP to consolidate its strong gains over the past couple of days and trade sideways to slightly lower. Expected range for today; 1.4055/1.4170”.

Next 1-3 weeks: “We indicated yesterday that further GBP strength cannot be ruled but noted that it would be “surprising if GBP can move above the February’s peak near 1.4280 (1.4230 is already quite a strong resistance)”. GBP popped briefly to a high of 1.4220 before dropping sharply to end the day on a soft note. The price action reinforces our view even though as mentioned yesterday, GBP is expected to continue to stay underpinned as long as the key support at 1.4000 is intact. In the meanwhile, shorter-term indicators are unwinding from oversold conditions and GBP is expected to trade sideways at these higher levels for the next few days”.