GBP/USD clings to the neutral bias near term – UOB

Cable’s attention has now shifted to the 1.3220 area, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that “further weakness towards 1.3225/30 would not be surprising” but were of the view that the odds for a sustained move below this level are “not high”. In line with expectation, GBP dipped to a low of 1.3222 before rebounding. Despite the bounce, the undertone is still weak and there is scope for a deeper probe towards 1.3200. At this stage, we still see low odds for a sustained down-move (next support is at 1.3160). Resistance is at 1.3265 but only a move back above 1.3290 would indicate that the current weakness has stabilized”.

Next 1-3 weeks: “While we have held the view that the pull-back in GBP has “room to extend lower to 1.3265/70” since last Thursday, the pace of decline since then has been more rapid than anticipated. From here, a NY closing below the 1.3225 would indicate that GBP has moved into a bearish phase (with an immediate target of 1.3100). This scenario would not be surprising unless GBP can move and stay above 1.3355 within these 1 to 2 days”.