GBP/USD: A drop to 1.1700 remains off the table – UOB

Prospects for further weakness remain in place for GBP/USD, although a visit to the 1.1700 region appears out of favour for the time being, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “While we expected GBP to weaken yesterday, we were of the view that ‘a break of the major support at 1.1800 appears unlikely’. The anticipated weakness exceeded our expectations as GBP dropped to 1.1761 before rebounding. Downward momentum appears to be slowing and this coupled with oversold conditions suggests that GBP is unlikely to weaken much further. For today, GBP is more likely to trade between 1.1750 and 1.1885.”

Next 1-3 weeks: “Our latest narrative was from two days ago (13 Jul, spot at 1.1880) where we highlighted that while downward momentum has not improved by much, the chance for GBP to break 1.1800 has increased. We added, “a break of 1.1800 would shift the focus to 1.1750”. Yesterday (14 Jul), GBP cracked 1.1800 and dropped to 1.1761 before rebounding. Downward momentum still appears to be a bit lackluster but as long as the ‘strong resistance’ level at 1.1940 (level was at 1.1980 yesterday) is not breached, GBP could continue to weaken. That said, the next major support at 1.1700 may not come into the picture so soon.”