GBP/USD stance shifted to neutral – UOB Group

The outlook on GBP/USD has now shifted to neutral from bullish, while Sterling is seen under pressure unless it can regain 1.3220, noted FX Strategists at UOB Group.

Key Quotes

“While GBP moved higher initially, it did quite reach the 1.3270 target (high of 1.3267). The subsequent sharp decline from the high was unexpected but the drop appears to be running ahead of itself. That said, a push below the overnight low of 1.3113 would not be surprising but the next support at 1.3075 is unlikely to be seriously challenged. Resistance is at 1.3180 followed by 1.3220. The 1.3267 high is not expected to be threatened anytime soon”.

“The bullish phase that started on Tuesday ended abruptly when GBP plunged and cracked the stop-loss level of 1.3130 (note that the high of 1.3267 yesterday was just a few pips below the immediate target of 1.3270). While the outlook for GBP is deemed as neutral from here, the sharp decline has quickly shifted the pressure to the downside even though any weakness is expected to encounter solid support at 1.3075 (a sustained move below this level appears unlikely for now). On the upside, only a move back above 1.3220 would indicate that the immediate downward pressure has eased”.