GBP/USD could test the top of the 1.3030/1.3220 range – UOB

Cable is seen neutral for the time being although it could attempt a test of the upper bound of the 1.3030/1.3220 range, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP “to extend rally to 1.3165 first before it should ease off”. However, GBP dropped sharply and hit 1.3029 before staging a strong and swift rebound. The rapid swing has resulted in a mixed outlook and GBP is expected to trade sideways today, albeit likely at a higher range of 1.3040/1.3140”.

Next 1-3 weeks: “While we indicated last Friday “the odds for further GBP weakness have clearly diminished”, the pace and extent of the subsequent rally in GBP was not expected (over Thursday and Friday, GBP gained a whopping +1.43%, the largest 2-day gain in 8 months). At this stage, we continue to hold a neutral stance and view the current GBP strength as part of a higher trading range. In other words, we do not expect a sustained up-move from here. That said, the immediate bias is on the upside and for the next few days, we expect GBP to probe the top of the expected 1.3030/1.3220 consolidation range”.