GBP/USD still faces some consolidation near term – UOB

Despite the recent up move, Cable is expected to keep the sideline theme unchanged in the short-term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that “despite the relatively weak NY close, downward momentum has not improved by much” but GBP could “drift lower and test 1.2400”. The subsequent movement in GBP was against our expectation as it rebounded strongly from 1.2428 and hit an overnight high of 1.2522. The rapid recovery appears to be running ahead of itself and further sustained rise is not expected. GBP is more likely to consolidate and trade sideways for now, expected to be between 1.2440 and 1.2520”.

Next 1-3 weeks: “After closing lower for 3 straights days, GBP rebounded strongly and hit an overnight high of 1.2522. The price action was not exactly surprising as we have held the same view since last Friday (19 Jul, spot at 1.2540) wherein we expect GBP to “trade sideways”. The underlying tone has firmed somewhat but for now, we continue to expect GBP to trade within a 1.2400/1.2580 range”.