GBP/USD looks consolidative in near-term – UOB

FX strategists at UOB Group expect the GBP/USD to stick to the current rangebound theme for the time being.

• "24-hour view: Our expectation for GBP to move lower yesterday was incorrect as it staged a surprising robust and rapid recovery to an overnight high of 1.3174. The rebound appears to be running ahead and while GBP could edge upwards from here, any advance is viewed as a higher trading range of 1.3140/1.3200 (a sustained rise above 1.3200 appears unlikely).
• Next 1-3 weeks: We highlighted yesterday (06 Jan, spot at 1.3085) that GBP is 'still trading sideways but risk of a break of bottom of expected 1.3000/1.3400 range has increased'. We added, GBP 'has to move and stay above 1.3190 or the current mild downward pressure would increase quickly'. GBP subsequently recouped all of its Friday's loss and touched a high of 1.3174. While downward pressure has eased somewhat, GBP has to register a NY closing above 1.3190 or risk of further weakness remains intact. That said, after yesterday's price action, it appears likely that GBP could trade between the two major levels of 1.3000 and 1.3400 for a period."