GBP/USD still bullish, extra GBP upside unlikely – UOB

In opinion of FX Strategists at UOB Group, Cable keeps the bullish stance unchanged although further gains appears somewhat unlikely in the near term.

Key Quotes

24-hour view: “GBP briefly touched a low of 1.3450 during last NY session before rebounding quickly. Despite the bounce, the undertone is still weak and a retest of 1.3450 would not be surprising. At this stage, a clear break below this level is not expected. Resistance is at 1.3550 followed the 1.3595 high registered last Friday. The latter level is unlikely to come into the picture”.

“While the robust recovery yesterday bodes well for GBP, we still hold the view that the odds for a break above the major weekly trendline resistance at 1.3655 have diminished. That said, only a move back below 1.3440 (stop-loss level unchanged) would indicate that the bullish phase that started 2 weeks ago (08 Sep, spot at 1.3100) has ended. In the meanwhile, GBP could consolidate between 1.3440 and 1.3655 for a couple of days before making the ‘decision’ to head higher or lower”.