GBP/USD: Diminished bets for a drop to 1.0000 – UOB

In the opinion of FX Strategists at UOB Group Quek Ser Leang and Peter Chia, the probability of GBP/USD to drop to the parity zone seems to have lost traction for the time being.

Key Quotes

24-hour view: “Yesterday, we held the view that GBP ‘is likely to edge lower but a sustained decline below 1.0630 is unlikely’. We did not expect the volatile trade as GBP plummeted briefly to 1.0539 before rocketing to a high of 1.0917 during NY hours. Further volatility is not ruled out, albeit likely within a narrower range of 1.0670/1.0970.”

Next 1-3 weeks: “Three days ago (26 Sep, spot at 1.0600), we highlighted that in view of the impulsive downward acceleration from last Friday, a further decline in GBP to 1.0000 is not ruled out. Yesterday (28 Sep), GBP surged to a high of 1.0917. Downward momentum has waned and a breach of 1.1000 (no change in ‘strong resistance’ level from yesterday) would indicate that the weakness in GBP from 2 weeks ago has stabilized. All in, after yesterday’s price movement, the probability of GBP dropping to 1.0000 this time round has diminished considerably.”