GBP/USD rangebound between 1.2785/1.2840 near term – UOB

In view of FX Strategists at UOB Group, Cable’s near term stance appears sidelined between 1.2785 and 1.2840.

Key Quotes

24-hour view: “We indicated yesterday that “another attempt to move below 1.2775 is not ruled out but a clear and sustained break is not expected”. GBP took a brief peek below 1.2775 (low of 1.2774) before rebounding. Downward momentum has eased further and the current price action is viewed as part of a consolidation phase. In other words, this pair is expected to trade sideways, likely between 1.2785 and 1.2840”.

Next 1-3 weeks: “We highlighted yesterday that “GBP has to ‘punch’ below 1.2775 as a slow drift lower amidst the current oversold conditions would increase the risk of a short-term low”. Instead of ‘punching’ through 1.2775, GBP took a peek at this level and rebounded quickly after briefly touching a low of 1.2774. The risk of a short-term low has increased but the bearish phase that started on 07 Aug (spot at 1.3045) is deemed as intact until 1.2870 is taken out (stop-loss adjusted lower from lower from 1.2900). Until then, a clear break below 1.2775 is not ruled out and could lead to a rapid drop to the next level at 1.2720. All that said, those who are short should consider reducing their position”.