Downside pressure in GBP/USD seems mitigated – UOB

The downside momentum in Cable appears to have lost traction, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to ‘edge higher and test the strong 1.2980 resistance’. GBP subsequently touched 1.2991 before easing off. The mild upward pressure has eased and for today, the bias is tilted to the downside. That said, any weakness is likely limited to a test of 1.2910 (a sustained decline below this level appears unlikely). Resistance is at 1.2975 followed by 1.2990.”

Next 1-3 weeks: “We cautioned yesterday (12 Feb, spot at 1.2955) that ‘rapid loss in downward momentum has decreased the risk of a break of 1.2850’. GBP subsequently breached the ‘strong resistance’ level of 1.2980 (high of 1.2991) and downward pressure has more or less dissipated. From here, GBP is expected to trade sideways between the two strong levels of 1.2850 and 1.3060. This sideway-trading phase could last for up to a week but looking forward, the prospect for a break of 1.2850 first is higher than a break of 1.3060.”