GBP/USD now faces strong hurdle at 1.4400 – UOB

FX Strategists at UOB Group remain neutral on Cable, although there is scope for further gains in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that GBP could “grind higher even though a sustained break of 1.4400 would be surprising”. GBP only managed to touch a fresh high of 1.4377 before plummeting to hit a low of 1.4283. GBP has likely found a short-term top and the current movement is viewed as the early stages of a consolidation phase. Overall, we expect GBP to trade sideways to slightly lower for today, likely between 1.4250 and 1.4350”. 

Next 1-3 weeks: “GBP hit a fresh post-Brexit high of 1.4377 yesterday before staging a relatively rapid and sharp pull-back (overnight low of 1.4283). While upward momentum has been dented somewhat, it is premature to expect a top and there is still scope for GBP to extend higher to 1.4400 (with lower odds for further extension to 1.4460). That said, 1.4400 is acting as a rather strong resistance now and may temporarily cap for the next couple of days. On the downside, the ‘key support’ remains unchanged at 1.4230 and only a break of this level would indicate that a short-term top is in place”.