GBP/USD still scope for a test of 1.3950 – UOB

FX Strategists at UOB Group believe Cable could attempt a visit to the 1.3950 area in the near term.

Key Quotes

24-hour view: “Expectation for GBP to advance higher was wrong as it traded in a relatively muted manner yesterday and registered an ‘inside day’. The undertone remains slightly positive and there is still scope for a test of the strong 1.3950 resistance even though a sustained break above this level seems unlikely (next resistance is at 1.3990). Support is at 1.3870 but only a move back below 1.3840 would indicate that the current mild upward pressure has eased”.

“We just turned neutral on GBP yesterday and there is no change to the view. Last week’s 1.3712 low is viewed as a temporary bottom and the current recovery has room to extend higher. However, there are stacks of strong resistance levels on the upside and any upmove from here is expected to be slow and grinding (the nearest significant resistance is at 1.3990). On the downside, only a move back below 1.3800 would indicate that the immediate upward pressure has eased”.