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GBP/USD: Additional weakness on the table – UOB

According to Lee Sue Ann, Economist at UOB Group, and Quek Ser Leang, Market Strategist, GBP/USD could return to the 1.2300 area in the coming weeks.

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24 hour view: After GBP/USD fell to a low of 1.2380 last Friday, yesterday we highlighted that “conditions remain oversold, but with no signs of stabilization yet, GBP/USD could fall to 1.2355 before the risk of a more sustained rebound. Our expectation did not materialize, as GBP/USD traded relatively calmly between 1.2371 and 1.2410 before closing virtually unchanged at 1.2385 (+0.02%). Although the bearish momentum has slowed, it is premature to expect a rebound. Today, GBP/USD could decline, but any decline is likely to be part of a lower range of 1.2355/1.2415. In other words, GBP/USD is unlikely to break clearly below 1.2355.

Next 1-3 weeks: We have maintained a negative opinion on GBP/USD for more than 2 weeks. In our most recent analysis last Friday (September 15, GBP/USD at 1.2405), we highlighted that the GBP/USD weakness has not stabilized, and that GBP/USD could continue to weaken. We noted that “the next level to watch is the May low near 1.2305.” We continue to maintain the same opinion. However, it should be noted that the bearish momentum is beginning to slow. If GBP/USD breaks above 1.2455 (“strong resistance” level previously at 1.2485), it would mean that GBP/USD weakness has stabilized.

Source: Fx Street

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