GBP/USD a visit to 1.2900 not likely – UOB

In opinion of FX Strategists at UOB Group, Cable’s pullback to the 1.2900 handle appears unlikely in the near term.

Key Quotes

24-hour view: “We indicated last Friday that “a move below 1.2950 would not be surprising but 1.2920 is unlikely to yield so easily”. GBP hit a low of 1.2939 before rebounding quickly. While upward momentum is not strong, there is room for a slow grind higher towards 1.3040/45. At this stage, a clear break above this level is not expected (next resistance is at 1.3060). Support is at 1.2975 followed by the 1.2939 low. The latter level is likely strong enough to hold any intraday pullback”.

“As indicated late last week, while the bearish phase that started last Monday (07 Aug, spot at 1.3045) is still intact, patchy downward momentum suggests that the odds for further extension to 1.2900 are not high. The short-term rebound last Friday reinforces our view even though GBP has to move clearly above 1.3060 (stop-loss level unchanged) to indicate that the bearish phase has ended. In the meanwhile, another push lower to 1.2900 is not ruled out just yet”.