Cable stays bullish, 1.3200 on the cards – UOB

FX Strategists at UOB Group remain bullish on GBP/USD, expecting a visit of the 1.3200 handle in the next 1-3 weeks.

Key Quotes

“GBP hit a fresh high of 1.3126 before plummeting to a low of 1.3005 after the release of weaker than expected UK inflation data. Despite the bounce from the low, the underlying tone is still weak and another test of the strong 1.3000 support seems likely. Based on the current indications, a sustained move below this level is not expected (next support is at 1.2960). On the upside, resistance is at 1.3080 followed by 1.3105. The 1.3126 high is not expected to come into the picture for now”.

“GBP registered a ‘bearish outside day’ yesterday and this certainly does not bode well for our bullish view. No thanks to a weak inflation number from UK, GBP plummeted to hit a low of 1.3005, just a few pips above the stop-loss for our bullish view at 1.3000. Upward momentum has been severely impacted but until 1.3000 is taken out, another attempt to move clearly above 1.3100 is not ruled out just yet even though the odds for such a move have diminished considerably. In the meanwhile, those who are long from 1.3075 may like to lighten their position if there is a bounce to 1.3075/80. Otherwise, a break of 1.3000 would indicate that GBP has moved into a neutral phase”.