GBP/USD now focused on 1.3460 – UOB

Cable faces a potential retracement to the 1.3400 neighbourhood in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected GBP to weaken yesterday, we were of the view that ‘1.3460 is likely out of reach’. The subsequent weakness exceeded our expectation as GBP dropped to 1.3451 before rebounding to close at 1.3515. Downward momentum is waning and further sustained weakness is unlikely. GBP is more likely to trade sideways, expected to be between 1.3450 and 1.3555.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (11 Jan, spot at 1.3525). As highlighted, a daily closing below 1.3460 could lead to GBP moving lower to 1.3400. While GBP subsequently dipped below 1.3460, it rebounded quickly after touching 1.3451. Overall, GBP has to move above 1.3630 or the current downside remains intact.”