GBP/USD: downside pressure alleviated above 1.3190 – UOB

The selling bias around Cable is expected to mitigate on a close above 1.3190, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected GBP to strengthen yesterday, we held the view that ‘any advance is viewed as a higher trading range of 1.3140/1.3200’. We added, “a sustained rise above 1.3200 appears unlikely”. GBP subsequently popped to a high of 1.3210 before staging a surprisingly sharp drop to an overnight low of 1.3095. The decline appears to have room to test last week’s low near 1.3055. For today, a clear break of this level is unlikely (next support is at 1.3000). Resistance is at 1.3150 followed by 1.3190. The 1.3210 high is not expected to come into the picture for today.”

Next 1-3 weeks: “We highlighted yesterday (07 Jan, spot at 1.3170) that GBP ‘has to register a NY closing above 1.3190 or risk of further weakness remains intact’. GBP touched 1.3210 but retreated quickly and ended the day at 1.3120 (-0.34%). The price action suggests the bottom of the expected 1.3000/1.3300 remains vulnerable (expected range is narrowed from 1.3000/1.3400). All in, GBP is expected to stay under pressure and only a NY closing above 1.3190 would ‘neutralize’ the current downward pressure.”