GBP/USD keeps the bearish note intact – UOB

Cable stays bearish for the time being, while scope for a test of 1.3458 has lost traction, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP traded between 1.3516 and 1.3575 yesterday, narrower than our expected 1.3505/1.3580 sideway-trading range. The consolidation phase appears incomplete and further range is expected from here, albeit likely at a higher range of 1.3525/1.3595”.

Next 1-3 weeks: “We highlighted last Friday (04 May, spot at 1.3570) that “in order to improve the prospect for a move to 1.3458, GBP has to stage an ‘impulsive and rapid’ break of the 1.3500 support”. GBP subsequently took out 1.3500 but rebounded quickly after touching a low of 1.3487. While further weakness to the year-to-date low at 1.3458 is still a possibility, shorter-term momentum has waned considerably and this coupled with oversold condition continues to suggest that the odds further weakness to 1.3458 are not high. On the upside, only a break of 1.3630 (‘stop-loss’ level previously at 1.3700) would indicate that the current bearish phase has ended”.