GBP/USD: Diminishing odds for further downside – UOB

The probability of further decline in Cable seems to be losing traction, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that 'momentum indicators are mostly neutral and for today, GBP could continue to consolidate, likely between 1.2300 and 1.2410'. GBP subsequently traded in a relatively quiet manner between 1.2297 and 1.2376. The price action offers no fresh clues and GBP could continue to consolidate for now. Expected range for today, 1.2310/1.2400.”

Next 1-3 weeks: “After dropping sharply to a low of 1.2248 on Tuesday (21 Apr), the lack of a follow-through on the downside for GBP came as a surprise. The brief pop higher in GBP yesterday touched 1.2415, just a few pips below of ‘strong resistance’ level of 1.2420. While downward momentum has eased, we are holding on to our view that GBP 'could weaken further to the month-to-date low near 1.2165'. That said, the odds for a lower GBP have diminished. From here, GBP has to move and stay below 1.2300 within these 1 to 2 days or a breach of 1.2420 (no change in ‘strong resistance’) would not be surprising.”