GBP/USD: Shrinking odds for a drop to 1.2980 – UOB

Cable’s potential decline to the 1.2980 region looks to have been losing momentum as of late, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for GBP to ‘drift lower to 1.3025’ was incorrect as it rebounded to a high of 1.3169 (low has been 1.3059). Upward momentum has picked up, albeit not by much and there is room for GBP to edge higher from here. That said, the prospect for a break of the strong resistance at 1.3200 is not high. Support is at 1.3120 followed by 1.3085.”

Next 1-3 weeks: “Two days ago (24 Aug, spot at 1.3095), we held the view that GBP ‘is likely to trade with a downward bias towards 1.2980’. GBP has not been able to make much headway on the downside and the quick loss in momentum indicates that the odds for GBP to move to 1.2980 have diminished. However, only a breach of 1.3200 (no change in ‘strong resistance’ level) would indicate that GBP is currently trading within a broad consolidation phase (instead of with a downward bias).”