GBP/USD: Further range bound in the pipeline – UOB

GBP/USD is still seen trading between 1.1050 and 1.1370 in the near term, suggest Markets Strategist Quek Ser Leang and Economist Lee Sue Ann at UOB Group.

Key Quotes

24-hour view: “Our view for GBP to trade sideways was incorrect as it plummeted by 0.85% (NY close of 1.1223). The oversold GBP weakness has room to dip below 1.1150 first before stabilization is likely. On the upside, a break of 1.1280 (minor resistance is at 1.1245) would indicate that the weakness in GBP has stabilized.”

Next 1-3 weeks: “Last Friday (14 Oct, spot at 1.1310), we indicated that GBP could rise to 1.1440. After GBP rose to 1.1440, we highlighted on Tuesday (18 Oct, spot at 1.1355) that the risk for GBP remains on the upside but it has to break clearly above 1.1440 before further sustained advance is likely. Yesterday (19 Oct), GBP dropped sharply and took out our ‘strong support’ level at 1.1220. The break of the ‘strong support’ indicates that upward pressure has dissipated. In other words, GBP is not strengthening further. The current movement is viewed as part of a consolidation phase and we expect GBP to trade sideways, likely within a range of 1.1050/1.1370.”