GBP/USD moved into a consolidation phase – UOB

In opinion of FX Strategists at UOB Group, Cable stays neutral in the near term and remains poised to prolong its consolidative theme.

Key Quotes

24-hour view: “Instead of trading sideways (as expected yesterday), GBP dropped sharply and hit an overnight low of 1.3192. Despite the bounce from the low, the undertone remains weak and a dip below 1.3192 seems likely even though there is a strong support at 1.3175 and this level may not be easy to break. On the upside, only a move back above 1.3260 would indicate that the immediate downward pressure has eased. Higher up, the 1.3292 high seen early yesterday is expected to be strong enough to cap any intraday GBP strength”.

Next 1-3 weeks: “We highlighted on Monday (25 Jun, spot at 1.3265) that the outlook for GBP has turned neutral and that the current movement is viewed as the early stages of a consolidation phase. There is no change to the view and we continue to expect GBP to trade sideways for now, likely within a 1.3175/1.3360 range. An intraday dip below the 1.3175 support is not ruled out but we do not expect a break below last week 1.3102 low, at least not for the remaining of this week (there is a strong short-term support at 1.3140)”.