GBP/USD: Downside pressure improved – UOB

GBP/USD could now grind lower and revisit the 1.2040 region in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘the rapid decline in GBP appears to have room to break the major support at 1.2165’. We added, ‘oversold conditions suggest that the next support at 1.2120 is unlikely to come into the picture’. Our view for a weaker GBP was not wrong even though the extent of the decline exceeded our expectations as GBP dropped sharply to 1.2106. While GBP could continue to weaken, conditions remain oversold and the next support at 1.2040 is likely out of reach for now. On the upside, a break of 1.2175 (minor resistance is at 1.2150) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (29 Jun, spot at 1.2185), we indicated that the recent consolidation phase. We highlighted that downward momentum is only beginning to build and any weakness from here could be limited to 1.2120 for now. While our view for a weaker GBP was correct, the pace of the decline was more rapid than expected as GBP plummeted to a low of 1.2106. Downward momentum has improved considerably and GBP could decline further to the next support at 1.2040. On the upside, a break of the ‘strong resistance’ at 1.2205 (level was at 1.2285 yesterday) would indicate that the current downward pressure has eased.”