GBP/USD downside pressure could see 1.3764 tested – UOB

Cable remains neutral near term while there is still room for a potential visit of 1.3764, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we highlighted yesterday that the weak undertone in GBP “could lead to further weakness towards 1.3860”, the subsequent sharp bounce from a low of 1.3858 came as a surprise. The 1.3858 low is likely a short-term base and the recovery has room to extend higher and retest the overnight high near 1.3990. At this stage, a sustained move above this level is not expected (next resistance is at 1.4020). Support is at 1.3930 but only a move back below 1.3900 would indicate that the current mild upward bias has eased”.

Next 1-3 weeks: “we were of the view that the consolidation phase “could last for a while more”. The sharp drop yesterday that cracked the bottom of the expected 1.3920/1.4200 consolidation phase came as a surprise and has shifted the immediate pressure to the downside. In other words, the outlook for GBP has turned negative and this could lead to further weakness towards the 1.3764 low seen earlier this month. Only a move back above 1.4020 would indicate that the immediate downward pressure has eased”.