GBP/USD: A deeper pullback is seen below 1.1900 – UOB

GBP/USD could accelerate its downside once 1.1900 is cleared, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We did not expect GBP to drop sharply to 1.1924 yesterday (we were expecting GBP to trade sideways). Downward momentum has improved, albeit not much. GBP could weaken further but a sustained decline below the major support at 1.1900 is unlikely. Resistance is at 1.1975, a breach of 1.2005 would indicate that GBP is not weakening further.”

Next 1-3 weeks: “Our latest narrative was from Tuesday (28 Feb, spot at 1.2065) where we held the view that GBP is likely to consolidate and trade in a broad range of 1.1970 and 1.2150. Yesterday, GBP took out 1.1970 and dropped to a low of 1.1924. Downward momentum is beginning to build. However, GBP has to crack another major support at 1.1900 before a sustained decline is likely. The chance of GBP breaking 1.1900 will remain intact as long as the ‘strong resistance’ (currently at 1.2045) is not breached within the next few days. Looking ahead, the next level to watch below 1.1900 is at the Jan’s low near 1.1840.”