GBP/USD: Further weakness on the cards – UOB

GBP/USD remains under pressure and could extend the decline to the 1.1150 and 1.1100 levels in the next weeks, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘is likely to drop below 1.1350’. We added, ‘The next support at 1.1300 is likely out of reach’. The anticipated weakness exceeded our expectations as GBP plunged to a low of 1.1237 before closing on a weak note at 1.1270 (-0.98%). Further weakness appears likely, even though it is left to be seen if GBP can maintain a foothold below 1.1200 (next support is 1.1150). Resistance is at 1.1270 followed by 1.1305.”

Next 1-3 weeks: “We have held a negative GBP view for a week now. In our latest narrative from yesterday (21 Sep, spot at 1.1380), we indicated that shorter-term downward momentum is beginning to build and GBP appears to be ready to move out of its consolidation phase. However, we were of the view that the major support at 1.1300 might not be easy to break. The 1.1300 level held during London hours (low of 1.1304) but gave way during NY session as GBP nose-dived to a low of 1.1237. The rapid increase in momentum suggests GBP is likely to weaken further. The next levels to monitor are at 1.1150 and 1.1100. The GBP weakness is intact as long as GBP does not move above 1.1360 (‘strong resistance’ level was at 1.1490 yesterday).”