GBP/USD: A breach of 1.14 remains on the cards – UOB
Cable is not “out of the woods” yet and could still test the 1.1400 area in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “We noted yesterday that ‘there is some tentative sign that the recent frenetic drop in GBP is about to stabile’ and expected GBP to ‘trade in a broad 1.1600/1.1900 range for now’. GBP subsequently traded within a lower range than anticipated (between 1.1445 and 1.1740). GBP is likely still taking a ‘pause’ after dropping sharply recently and for today, GBP is expected to trade between 1.1500 and 1.1780.”
Next 1-3 weeks: “GBP dropped to a fresh low of 1.1413 last Friday before snapping higher to 1.1955 (closed at 1.1671, +1.66%). There is some tentative sign that the recent weakness is stabilizing but only a move above 1.2150 (no change in ‘strong resistance’ level) would indicate that GBP is ready to take a breather from its recent ferocious drop. Meanwhile, GBP could continue to trade in a volatile manner but at this stage, we are not ruling out a break of 1.1400 just yet.”