The slight increase in downward momentum suggests GBP is likely to trade in a lower range of 1.3480/1.3560. In the longer run, upward momentum is beginning to wane, but only a breach of 1.3460 would mean that 1.3635 is out of reach this time round, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Upward momentum is beginning to wane
24-HOUR VIEW: “Our view for GBP to ‘consolidate 1.3540 and 1.3600” yesterday was incorrect, as it fell to 1.3501 before closing at 1.3507, down 0.42%. The decline only resulted in a slight increase in downward momentum, and rather than a sustained drop, GBP is more likely to trade in a lower range of 1.3480/1.3560 today.”
1-3 WEEKS VIEW: “We have held a positive GBP view since the middle of last week. In our most recent narrative from two days ago (26 May, spot at 1.3530), we pointed out that ‘upward momentum remains strong.’ We added, The next objective is 1.3635.’ Yesterday, GBP saw a surprisingly sharp pullback, dropping to a low of 1.3501. While upward momentum is beginning to wane, only a break below 1.3460 (no change in ‘strong support’ level from yesterday) would mean that 1.3635 is out of reach this time round.”
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