GBP/USD in consolidation-mode between 1.3735-1.3900 – UOB

Cable is forecast to extend the rangebound theme in the next weeks, likely within the 1.3735-1.3900 range, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “While we noted yesterday that ‘downward momentum has not improved by all that much’, we were of the view that GBP ‘could edge lower to1.3775’. Our view was incorrect as GBP rebounded strongly to 1.3890. The rapid bounce appears to be running ahead of itself and GBP is unlikely to strengthen much further. For today, GBP is more likely to consolidate and trade between 1.3820 and 1.3900.”

Next 1-3 weeks: “After GBP fell sharply to 1.3800, we indicated yesterday (14 Jul, spot at 1.3805) that ‘shorter-term downward momentum has improved somewhat but it is too early to expect the start of a sustained decline’ and we expected GBP to ‘trade between 1.3735 and 1.3900 for a period of time’. There is no change in our view for now even though we did not quite anticipate the subsequent rapid rebound to an overnight high of 1.3890. Looking ahead, a breach of 1.3900 is not ruled out but GBP has to close above 1.3930 before a sustained advance can be expected.”

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