GBP/USD moved into a consolidative phase – UOB

FX Strategists at UOB Group noted Cable has moved into a consolidative phase in the short-term horizon.

Key Quotes

24-hour view: “While our anticipation for a lower GBP last Friday was correct, the break of the strong 1.3000 support was not expected as Brexit headlines sent GBP plummeting (NY close of 1.2979). GBP opened lower this morning and the immediate pressure is still on the downside”.

Next 1-3 weeks: “Despite the strong surge in GBP early this month, we have held the same view since last Wednesday (07 Nov, spot at 1.3100) wherein “it would be surprising if the rebound in GBP could break 1.3190” (GBP subsequently traded to a high of 1.3176). However, the manner of which it plunged below the 1.3000 ‘key support’ last Friday was not exactly expected (low of 1.2959). While the price action does not change the overall neutral outlook for GBP, upward pressure has eased and the 1.3176 high is deemed as a short-term top. In other words, we do not expect GBP to move above 1.3176 for the next couple of weeks. For now, we view the current movement as part of a consolidation phase. Near-term, the bias is titled to the downside but at this stage, we view any weakness as part of a broad 1.2800/1.3080 range”.