FX Strategists at UOB Group noted Cable’s potential test of 1.3458 has lost some momentum in the near term.
“We highlighted on Wednesday (02 May, spot at 1.3610) that “the next level to aim for is at 1.3540” and added that this strong support “could temporarily check the decline in GBP”. GBP dipped to a low of 1.3537 yesterday before rebounding quickly. Shorter-term downward momentum has eased considerably and while the outlook for GBP is still deemed as bearish, the odds for further GBP weakness towards the next major support at 1.3458 (year-to-date low) are not high at this stage”.
“In order to improve the prospect for a move to 1.3458, GBP has to stage an ‘impulsive and rapid’ break of the 1.3500 support. Otherwise, a prolonged consolidation at these levels would lead to further loss in momentum and increase the risk of a short-term low. On the upside, the ‘stop-loss’ level is adjusted lower to 1.3700 from 1.3750”.
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