GBP/USD is now seen trading between 1.2250 and 1.2430 in the next few weeks, suggest Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.
24-hour view: “Yesterday, we expected GBP to ‘trade sideways between 1.2350 and 1.2425’. GBP rose to a high of 1.2416 in London trade before declining to a low of 1.2339 in late NY. The underlying tone has softened somewhat but while GBP is likely to edge lower today, it is unlikely to break the major support at 1.2295 (minor support is 1.2315). Resistance is at 1.2375, followed by 1.2400. The high of 1.2416 is unlikely to come into view today.”
Next 1-3 weeks: “We highlighted yesterday (31 Jan, spot at 1.2400) that upward momentum has waned but as long as 1.2315 (‘strong support’ level) is not breached, there is still a slim chance for GBP to break above 1.2450. GBP dropped to a low of 1.2339 in NY trade before closing on a soft note at 1.2349 (-0.41%). While our ‘strong support’ has not been breached, upward momentum has more or less dissipated. In other words, the GBP strength from earlier this month (see annotations in the chart below) has ended. GBP has likely moved into a consolidation phase and is likely to trade between 1.2250 and 1.2430 for the time being.”