GBP/USD consolidative near term – UOB

FX Strategists at UOB Group noted that Cable faces extra consolidation in the near term.

Key Quotes

24-hour view: “While GBP closed largely unchanged yesterday, the registered range of 1.3932/1.4025 was much lower than out expected 1.3960/1.4050 consolidation range. Indicators are mostly ‘neutral’ which suggests further range trading for now, likely within a 1.3940/1.4040”.

Next 1-3 weeks: “As highlighted yesterday (19 Feb), the rapid up-move in GBP last week appears to be running ahead of itself. However, a move above last Friday’s 1.4145 peak is not ruled out but a sustained move above 1.4200 is not expected for now. In other words, the neutral phase that started 3 weeks ago is still intact and the price action since then is viewed as part of a rather broad consolidation phase that could last for a while more. Looking further ahead, a clear break below the bottom of the currently expected 1.3920/1.4200 consolidation range would suggest a retest of the 1.3764 low seen earlier this month. The 1.3764 low sits near the rising trend-line support and a break of this rather strong level would indicate that GBP could head much lower in the subsequent weeks”.