United Overseas Bank (UOB) strategists Quek Ser Leang and Christopher Wong note GBP/USD has corrected sharply from recent highs near 1.3556 but now looks set to consolidate between 1.3450 and 1.3520 intraday. The 1–3 week outlook still sees renewed upward momentum, with 1.3590 as a key level to monitor, while a break below 1.3450 would point to a period of consolidation before any further gains.

Pound steadies after sharp retreat

"24-HOUR VIEW: Two days ago, GBP surged to a high of 1.3556. Yesterday, when GBP was at 1.3540, we indicated the following: “The sharp rally appears excessive, but with no sign of pause yet, GBP could continue to rise. However, given the deeply overbought conditions, any advance could be limited to a test of 1.3560.” Our assessment turned out to be incorrect, as GBP did not test 1.3560. Instead, it retreated sharply to a low of 1.3460 before closing 0.43% lower at 1.3480. The sharp pullback has stabilised somewhat, and instead of continuing to decline today, GBP is more likely to trade in a range between 1.3450 and 1.3520."

"1-3 WEEKS VIEW: After GBP surged on Wednesday, we indicated yesterday (16 Jul, spot at 1.3540) that “the renewed upward momentum suggests that GBP has resumed its advance.” We also highlighted that “the level to monitor is 1.3590.” We did not expect GBP to pull back sharply to 1.3460. Upward momentum has eased somewhat, and a breach of 1.3450 (no change in ‘strong support’ level) would suggest that GBP could consolidate first before pushing higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)