GBP/USD: Upside momentum loses traction – UOB

In opinion of FX Strategists at UOB Group, the upside bias in Cable could be running out of steam.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the pullback in GBP has room to extend lower but a clear break of the strong support at 1.3860 appears unlikely’. GBP did not quite challenge 1.3860 as it dipped to 1.3876 during late NY hours before closing largely unchanged at 1.3886 (- 0.07%). Downward pressure has eased and GBP is likely to consolidate for today, expected to be between 1.3860 and 1.3920.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (02 Aug, spot at 1.3900). As highlighted, while upward momentum has diminished, only a break of 1.3860 (no change in ‘strong support’ level) would indicate that the positive phase in GBP that started about a week ago has run its course. That said, GBP has to move and stay above 1.3920 within these 1 to 2 days or the odds for a move to 1.4000 would diminish quickly.”