GBP/USD outlook shifted to bearish – UOB

Following the recent price action in Cable, FX Strategists at UOB Group have now shifted their outlook to bearish from neutral.

Key Quotes

“GBP plunged after BOE’s decision to raise rate for the first time in a decade. While the outsized decline has shifted the outlook for GBP to bearish, the down-move is already approaching the major 1.3025/30 level (last month’s low as well as rising trend-line support)”.

“The rapid drop appears to be running ahead of itself but a dip below 1.3025/30 would not be surprising and this could lead to a test of the next support near 1.2970. The next significant support is at 1.2870 and at this stage, the prospect of a move towards this level is not high”.

“On the upside, the key level is at 1.3320 (this week’s high) but if GBP can move and stay above 1.3200 (‘stop-loss’ level), it would be enough to indicate that a temporary low is in place. On a shorter-term note, 1.3135 is already a strong resistance”.