GBP/USD still faces tough support at 1.1300 – UOB

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further downside pressure in GBP/USD is expected to meet a solid support around 1.1300 in the next weeks.

Key Quotes

24-hour view: “We expected GBP to ‘trade within a higher sideway-trading range of 1.1400/1.1480’ yesterday. However, after rising to a high of 1.1461, GBP dropped quickly to 1.1358 during late NY session. Downward momentum has improved, albeit not by much. From here, barring a break of 1.1430, GBP is likely to drop below 1.1350. The next support at 1.1300 is likely out of reach for today.”

Next 1-3 weeks: “We have held a negative GBP view for a week now. In our latest narrative from Monday (19 Sep, spot at 1.1435), we indicated that while the downside risk in GBP remains intact, oversold conditions could lead to 1 to 2 days of consolidation first. Shorter-term downward momentum is beginning to build and GBP appears to be ready to move out of its consolidation phase. That said, the major support at 1.1300 might not be easy to break. On the upside, a breach of 1.1490 (‘strong resistance’ level was at 1.1540 yesterday) would indicate that the weakness in GBP that started one week ago has stabilized.”