GBP/USD risks a drop to the 1.3760 region – UOB

Cable’s downside momentum could extend to the 1.3760 zone in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday “improved downward momentum could lead to GBP moving below 1.3860 but the next support at 1.3820 is likely out of reach”. We underestimated the downward momentum as GBP plummeted to 1.3779 before rebounding. The sharp rebound has scope to extend but any advance is likely limited to a test of 1.3900. The next resistance at 1.3930 is unlikely to come into the picture. Support is at 1.3820 followed by 1.3790.”

Next 1-3 weeks: “Last Friday (05 Feb, spot at 1.3890), we highlighted that “shorter-term momentum is beginning to improve but GBP has to close below 1.3820 before a sustained decline can be expected”. GBP subsequently dropped briefly to 1.3779 before rebounding to close at 1.3831. Downward momentum has improved a tad and GBP could edge lower to 1.3760 in the coming days. On the upside, a break of 1.3965 would indicate the current mild downward pressure.”