GBP/USD keeps the neutral outlook unchanged – UOB

In opinion of FX Strategists at UOB Group, the outlook for Cable remains neutral in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the strong bounce has scope to test the major resistance at 1.4020’. We added, ‘in view of the overbought conditions, GBP may not be able to maintain a foothold above this level (minor resistance is at 1.4000)’. Our expectation did not materialize as GBP rose to 1.4001, dropped sharply to 1.3897 before rebounding to end the day at 1.3932 (-0.27%). Downward momentum has improved a tad and the bias is tilted to the downside. That said, any weakness is likely limited to a test of 1.3880. The next support at 1.3850 is unlikely to come into the picture. Resistance is at 1.3950 followed by 1.3980.”

Next 1-3 weeks: “Yesterday (18 Mar, spot at 1.3970), we highlighted that ‘upward momentum is beginning to improve but GBP has to close above 1.4050 before a sustained advance can be expected’. We added, ‘the odds for a sustained advance are not high for now but would remain intact as long as GBP does not move below 1.3880’. We did not anticipate the rapid manner by which GBP gave up most of its gains from the previous day (GBP dropped to a low of 1.3897). While 1.3880 is still intact, the build-up in upward momentum has fizzled out. The outlook for GBP is neutral now and it is likely to trade between 1.3810 and 1.4010.”