GBP/USD faces extra consolidation near-term – UOB

Cable is expected to extend the consolidative theme between 1.2470 and 1.2700 in the near-term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we indicated that GBP ‘is in a correction phase’ and held the view ‘there is scope to GBP to edge lower but any weakness is likely limited to a test of 1.2550’. We added, the next support is at 1.2510. While our expectation for GBP to weaken was not wrong, we did not anticipate the sharp drop to a low of 1.2520 and the subsequent strong rebound to a high of 1.2625. The rapid swings have resulted in a mixed outlook and for today, GBP could continue to trade in a choppy manner, likely within a 1.2525/1.2630 range.”

Next 1-3 weeks: “We highlighted on Tuesday (14 Jul, spot at 1.2545) that GBP ‘could edge lower but any weakness is viewed as part of a 1.2430/1.2650 range’. However, GBP rose and tested the top of the range instead (overnight high of 1.2650). Momentum indicators have turned ‘neutral’ and instead of edging lower to 1.2430, GBP is more likely to trade sideways within a broad 1.2470/1.2700 range.”