GBP/USD is now seen within 1.2250 and 1.2430 – UOB

GBP/USD remains consolidative and should navigate the 1.2250-1.2430 range in the next weeks, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While we expected GBP to weaken yesterday, we were of the view that ‘it is unlikely to break the support at 1.2295’. The anticipated weakness exceeded our expectations as GBP dropped to 1.2285 before recovering. Today, the risk for GBP still appears to be on the downside even though the major support at 1.2250 is unlikely to come under threat. On the upside, a break of 1.2365 (minor resistance is at 1.2345) would indicate that the downside risk has faded.”

Next 1-3 weeks: “We indicated yesterday (31 Jan, spot at 1.2350) that the GBP strength from earlier this month has ended. We added, GBP has likely moved into a consolidation phase and is likely to trade between 1.2250 and 1.2430 for the time being. GBP subsequently dropped to 1.2285 before rebounding. While short-term momentum has improved somewhat, we continue to hold the view that GBP is in a consolidation phase. Looking ahead, if GBP breaks and stays below 1.2250, it would increase the risk of a pullback toward 1.2130.”