GBP/USD undertone remains constructive – UOB

FX Strategists at UOB Group noted Cable could attempt a consolidation scheme ahead of advancing further.

Key Quotes

“We have held the same view since Tuesday (10 Apr, 1.4130) that there is “scope for GBP to test the strong 1.4200 resistance” and added yesterday (11 Apr, 1.4180) that “an intraday move above 1.4200 would not be surprising” but last month’s 1.4244 peak is a major resistance and is “unlikely to be seriously challenged”.

“Subsequently, GBP hit an overnight high of 1.4223 before easing off. Despite the pullback from the high, the undertone has improved further and from here, the prospect for a move above 1.4244 has increased. That said, the current GBP strength appears to be ‘transitory’ and a sustained rally above 1.4244 would come as a surprise (there is another strong resistance at 1.4280 ahead of the year-to-date high of 1.4346). Overbought shorter-term conditions suggest GBP could consolidate for a couple of days first before attempting to move higher. Overall, we expect GBP to stay supported and only a break below 1.4110 would indicate that that the current mild upward pressure has eased”.