GBP/USD now targets 1.3850 in the short-term – UOB

Cable keeps the neutral stance unchanged so far and risks a visit to the mid-1.3800s in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday the weakness in GBP “lacks momentum” and a “sustained break below 1.3900 seems unlikely”. In line with expectation, GBP dipped to a low of 1.3895 before rebounding quickly. While momentum remains patchy at best, a probe of the next support at 1.3875 would not be surprising but we do not expect any weakness to be sustained. Resistance is at 1.3950 but only a move back above 1.3980 would indicate that the current mild downward pressure has eased”.

Next 1-3 weeks: “The 1.3900 level that was first highlighted earlier this week was finally ‘tested’ as GBP touched an overnight low of 1.3895. Downward momentum is still not strong but with no sign of stabilization just yet, we see scope for GBP to grind lower to 1.3850 (next support is at 1.3800). Only a break of the ‘key resistance’ at 1.4020 (level was at 1.4040 yesterday) would indicate that the current weakness has stabilized”.