GBP/USD remains bearish near term – UOB

FX Strategists at UOB Group stay negative on Cable, although scope for a decline to YTD lows appears alleviated.

Key Quotes

24-hour view: “The choppy swing in GBP yesterday came as a surprise. GBP rose initially to hit 1.3618 before plummeting to a low of 1.3460 (holding just above the year-to-date low of 1.3458). While downward momentum has eased somewhat with the subsequent bounce from the low, it is too soon to expect a sustained recovery. GBP is more likely to continue to trade in a choppy manner, likely within a 1.3470/1.3580 range”.

Next 1-3 weeks: “In the latest update on Tuesday (08 May, spot at 1.3560), we left off with the view that the outlook for GBP is “still bearish but odds for further weakness to 1.3458 are not high”. GBP subsequently traded sideways and shorter-term momentum has weakened further. From here, we continue to hold the view that the prospect for further weakness is not high. However, only a break of 1.3630 (‘stop-loss’ level unchanged) would indicate that the bearish phase has ended”.