In opinion of FX Strategists at UOB Group, further recovery in GBP/USD should meet s tough barrier at 1.3460 in the near term.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is scope for GBP test last week’s low near 1.3275’. We added, ‘a sustained decline below this level is unlikely’. While our view was not wrong as GBP dropped to 1.3275, we did not anticipate the sharp rebound from the low (high has been 1.3407). The rebound has room to extend but is unlikely to break the strong resistance at 1.3460 (there is another resistance at 1.3440). Support is at 1.3370 followed by 1.3340.”
Next 1-3 weeks: “Yesterday (02 Mar, spot at 1.3330), we held the view that the odds of GBP breaking 1.3250 have increased. GBP subsequently dropped to 1.3275 before staging a surprisingly strong rebound. Downward momentum has waned somewhat and a breach of 1.3460 (no change in ‘strong resistance’ level from yesterday) would indicate that 1.3250 is out of reach this time round. In order to rejuvenate the waning momentum, GBP has to move and stay below 1.3340 within these 1 to 2 days or a break of the ‘strong resistance’ would not be surprising.”