GBP/USD risks further consolidation – UOB
According to FX Strategists at UOB Group, Cable is expected to trade within the 1.29-1.32 range for the next weeks.
24-hour view: “The manner by which GBP gave up its strong gains from late last week came as a surprise as it nose-dived by -1.55% to close at 1.3000. The impulsive decline appears to have room to extend further but oversold conditions suggest the Jan’s low of 1.2955 is likely out of reach. On the upside, 1.3065 is expected to be strong enough to cap any intraday bounce (minor resistance is at 1.3035).”
Next 1-3 weeks: “While our view has been proven wrong on many occasions before, to be proven wrong within a single day is not exactly common. When GBP edged above the top of our previously expected 1.2900/1.3200 range last Friday, we indicated yesterday (03 Feb, spot at 1.3175) that ‘the risk has shifted to the upside towards 1.3285’. However, GBP nosed dived and gave up most if not all of its strong gains from late last week as it plunged by -1.55% (the largest 1-day drop since Nov 2018). The recent sharp and rapid but short-lived price actions have resulted in a mixed outlook. From here, we are reverting back to our view from earlier last week wherein GBP is expected to trade in an erratic manner between the two major levels of 1.2900 and 1.3200.”