GBP/USD is likely in a range-trading phase – UOB Group

FXStreet Insights Team FXStreet

Sharp rebound has scope to test 1.3495 before a pullback can be expected; 1.3520 is not expected to come under threat. In the longer run, GBP is likely in a range-trading phase between 1.3390 and 1.3520, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Sharp rebound has scope to test 1.3495

24-HOUR VIEW: "GBP fell to a low of 1.3393 last Friday. When GBP was at 1.3405 in the early Asian session yesterday, we stated that 'even without a significant increase in downward momentum, GBP may yet test the major support at 1.3370'. We added, 'a clear break below this level appears unlikely'. Our assessments were incorrect, as GBP rebounded sharply to a high of 1.3486. The advance has scope to test 1.3495 before a pullback can be expected. The major resistance at 1.3520 is not expected to come under threat. On the downside, support levels are at 1.3445 and 1.3420."

1-3 WEEKS VIEW: "We revised our GBP view to negative yesterday (12 Jan, spot at 1.3405). We were of the view that GBP 'could decline to 1.3370, potentially reaching 1.3340'. Our view was invalidated quickly as GBP rose and broke above our ‘strong resistance’ level at 1.3475 (high of 1.3486). The price action suggests that GBP is likely in a range-trading phase, probably between 1.3390 and 1.3520."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD remains depressed below 1.3400 as escalating US-Iran tensions underpin USD

The GBP/USD pair finds some support near 1.3370 after a modest gap-down opening on Monday, though it lacks bullish conviction and remains below 1.3400. Nevertheless, spot prices, for now, seem to have stalled the pullback from a nearly four-week high, around the 1.3450 area, touched on Friday amid mixed fundamental cues.

EUR/USD weakens to near 1.1400 as US-Iran escalation boosts US Dollar

The EUR/USD pair edges lower to around 1.1400 during the early Asian session on Monday, pressured by heightened geopolitical tensions in the Middle East. Federal Reserve Bank Governor Christopher Waller and European Central Bank policymaker Isabel Schnabel are set to speak later in the day.

Gold slides over 1% toward $4,050 on Fed-hike bets, firmer USD

Gold is losing over 1% to extend the decline toward $4,050 in the Asian session on Monday as further escalation of tensions between the US and Iran underpins the safe-haven US Dollar. Moreover, inflation worries stemming from rising Crude Oil prices cement expectations for a Fed rate hike in 2026 and further benefit the buck, exerting additional pressure on the yieldless bullion.

Week ahead: US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.