Pound Sterling (GBP) is expected to continue to trade in a range against US Dollar (USD), albeit a higher one of 1.3270/1.3320. In the longer run, the likelihood of GBP breaking clearly below 1.3140 has diminished considerably, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Likelihood of GBP breaking below 1.3140 has diminished
24-HOUR VIEW: “GBP traded between 1.3255 and 1.3331 two days ago before closing largely unchanged at 1.3287 (+0.07%). Yesterday, we stated that ‘the price action did not result in any increase in either downward or upward momentum.’ We were of the view that GBP ‘could continue to trade in a range, most likely between 1.3260 and 1.3330.’ Our view was not wrong, even though GBP traded in a narrower range of 1.3260/1.3316. We continue to expect range trading, but the firmer underlying tone suggests a higher range of 1.3270/1.3320.”
1-3 WEEKS VIEW: “We have held a negative GBP view since early last week. Last Friday, GBP dropped and almost reached our technical target at 1.3140 (low has been 1.3143) before rebounding. In our latest narrative from Monday (04 Aug, spot at 1.3275), we highlighted that ‘the likelihood of GBP breaking clearly below 1.3140 has diminished considerably, but only a breach of 1.3355 (‘strong resistance’ level) would indicate that the GBP weakness has stabilized.’ Although downward momentum continues to slow, we will maintain the same view for now.”
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