GBP/USD now looks to 1.4235 – UOB

Cable needs to close above 1.4235 to reignite another positive phase, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for GBP to ‘dip to 1.4075 first before stabilizing’ did not materialize. Instead, GBP rebounded to an overnight high of 1.4192. Despite the relatively strong rebound, upward momentum has not improved by much. However, there is scope for GBP to test the Tuesday’s high at 1.4220. For today, a sustained rise above this level is unlikely (there is another strong resistance at 1.4235). The current mild upward pressure is deemed intact as long as GBP does not breach 1.4130 (minor support at 1.4150).”

Next 1-3 weeks: “Yesterday (20 May, spot at 1.4115), we held the view that the recent positive phase in GBP has ended and we expected GBP to ‘trade within a broad 1.4000/1.4200 range’. We did quite anticipate the subsequent swift rebound as GBP rose to 1.4192 during NY session. Despite the rebound, it is too early to expect GBP to move into a new positive phase. GBP has to close above 1.4235 before a move to 1.4290 can be expected. At this stage, the prospect for GBP to move clearly above 1.4235 is not high but it would remain intact as long as GBP does not move below 1.4100 within these couple of days.”