GBP/USD undertone remains negative – UOB

FX Strategists at UOB Group remain neutral on the pair and still view the likelihood of a test of the 1.3800 zone.

Key Quotes

24-hour view: “The wild swing to a high of 1.4067 (post-BOE) and the subsequent sharp and rapid drop back to an overnight low of 1.3871 was unexpected. The choppy price action has resulted in a mixed outlook and further whippy trading is expected from here, likely within a broad 1.3860/1.4000 range”.

Next 1-3 weeks: “GBP spiked to a high of 1.4067 yesterday, holding just below the key short-term resistance at 1.4100. The subsequent sharp drop has clouded the outlook for this pair even though the undertone remains weak and we continue to hold the view that the pullback from last month’s peak has “room to extend lower” to 1.3800. That said, 1.3835 is acting as a very strong support now and this level could hold for a few more days. On the upside, only a move back above 1.4100 would indicate that the current weak undertone has eased”.