GBP/USD: Likely to trade in a sideways range of 1.3570/1.3635 – UOB Group

Momentum indicators are still mostly flat; Pound Sterling (GBP) is likely to trade in a sideways range of 1.3570/1.3635 against US Dollar (USD). In the longer run, the likelihood of GBP dropping to 1.3510 is increasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Momentum indicators are still mostly flat

24-HOUR VIEW: "Two days ago, GBP dropped sharply to a low of 1.3528 and then rebounded quickly. Yesterday, we pointed out that 'the brief drop did not lead to any increase in downward momentum.' We held the view that GBP 'is likely to trade sideways today, probably in a range of 1.3540/1.3640.' While our view of sideways trading was not wrong, GBP traded in a narrower range than expected, between 1.3566 and 1.3620. Momentum indicators are still mostly flat, and we continue to expect sideways trading. Expected range for today: 1.3570/1.3635."

1-3 WEEKS VIEW: "Last Thursday (03 Jul, spot at 1.3650), we indicated that 'short-term downward momentum is increasing, but it is not strong enough to indicate a sustained decline just yet.' We also highlighted that 'for a continued down-move, GBP must first close below 1.3560.' After GBP fell to a low of 1.3528 on Tuesday and closed at 1.3593, we highlighted yesterday (09 Jul, spot at 1.3590) that 'the likelihood of GBP dropping to 1.3510 is increasing.' We will maintain our view provided that the ‘strong resistance’ at 1.3680 (level unchanged from yesterday) is not breached."