GBP/USD seems to have moved into a consolidative phase – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group note GBP/USD is now likely to trade within the 1.2800-1.3100 range in the next few weeks.

Key Quotes

24-hour view: Yesterday, we held the view that GBP “could dip below 1.2780 but might not be able to maintain a foothold below this level.” Instead of dipping below 1.2780, GBP rebounded strongly and closed higher for the first time in seven days (1.2901, +0.59%). Today, GBP could rebound further to 1.2950. The major resistance at 1.3000 is unlikely to come into view. Support is at 1.2865, followed by 1.2835. 

Next 1-3 weeks: We have held a negative GBP view since the middle of last week. Yesterday (25 Jul, spot at 1.2815), we noted that downward momentum had increased slightly. We stated that “In order for GBP to decline further, it must break and stay below 1.2780.” GBP did not break 1.2780. Instead, it rebounded to a high of 1.2905. The breach of our ‘strong resistance’ level at 1.2900 indicates that downward pressure has faded. From here, we expect GBP to trade in a range, probably between 1.2800 and 1.3100.