GBP/USD now looks to 1.3820 – UOB

In opinion of FX Strategists at UOB Group, Cable’s uptrend is expected to lose traction on a breach of 1.3820.

Key Quotes

24-hour view: “We expected GBP to strengthen yesterday but we were of the view that ‘the prospect for a break of 1.3950 is not high’. However, GBP rose to 1.3955 before staging a surprisingly sharp and swift drop to 1.3870. While the rapid decline appears to be running ahead of itself, GBP could continue to weaken towards 1.3845. The next support at 1.3820 is likely ‘safe’ for now. On the upside, a move above 1.3925 (minor resistance at 1.3905) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “We have held a positive view in GBP for more than a week now. On Monday (15 Feb, spot at 1.3870), we noted that ‘the outlook for GBP is still positive but it may take a few days for 1.3950 to come into the picture’. GBP popped to a high of 1.3955 yesterday (16 Feb) before dropping sharply. Upward momentum has been dented and the odds for GBP to extend its recent gains to the next resistance at 1.4000 are not high. Unless GBP can move and stay above 1.3925 within these 1 to 2 days, a break of 1.3820 (no change in ‘strong support’ level from yesterday) would indicate that the current GBP strength has run its course.”