GBP/USD: A test of 1.3050 remains in the pipeline – UOB

FX Strategists at UOB Group do not rule out a drop to 1.3050 in cable in the next weeks.

Key Quotes

24-hour view: “Yesterday, we highlighted that GBP ‘could edge higher to 1.3205 before easing off’. GBP subsequently rose to 1.3195 before dropping sharply to 1.3081 during late NY session. Despite the decline, downward momentum has not improved by much. While there is room for GBP to weaken, a break of the major support at 1.3050 appears unlikely (next support is at 1.3000). Resistance is at 1.3135 followed by 1.3180.”

Next 1-3 weeks: “In our latest narrative from yesterday (10 Mar, spot at 1.3170), we highlighted that the downside risk in GBP is intact but the chance for GBP to decline has diminished. We did not expect the subsequent sharp drop to 1.3081. From here, GBP could dip below 1.3050 but barring a surge in downward momentum, the next support at 1.3000 could be out of reach. Overall, only a breach of 1.3220 (‘strong resistance’ level was at 1.3250 yesterday) would indicate that the weak phase that started 2 weeks ago has run its course.”