GBP/USD poised for further consolidation – UOB

FX Strategists at UOB Group remain neutral on Cable, while allow for extra consolidation in the next weeks.

Key Quotes

24-hour view: “The rapid and sharp drop from a high of 1.4145 suggests that a short-term top is in place. The current movement is viewed as a part of a consolidation phase and GBP is expected to trade sideways for today, likely within a 1.3970/1.4080 range”.

Next 1-3 weeks: “While we highlighted last week that it is “premature to expect the start of a major bearish reversal”, the sharp recovery that rose to a high of 1.4145 on Friday was unexpected. The rapid up-move appears to be running ahead of itself even though a move above 1.4145 would not be surprising. That said, a sustained move 1.4200 is not expected for now. To put it another way, the neutral phase that started about 3 weeks ago (see update on 30 Jan, spot at 1.4075) 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. On a shorter-term note, GBP is expected to trade sideways to slightly higher, likely within a 1.3920/1.4200 range”.