In the opinion of economist Lee Sue Ann and UOB Group Markets Strategist Quek Ser Leang, a break below the 1.2500 support in GBP/USD in the short term is not ruled out.
24 hour view: Our forecast for GBP/USD to trade in a range yesterday was wrong as it fell to as low as 1.2529 and then bounced to end the day at 1.2564 (0.51%). Although the bounce in oversold conditions has caused momentum to slow, it is too early to expect a bottom. Today, as long as GBP/USD remains below 1.2615 (minor resistance is at 1.2590), it could continue to fall. Given the oversold conditions, a clear break of 1.2500 is unlikely.
Next 1-3 weeks: Our most recent analysis dates from two days ago (Sep 4, GBP/USD at 1.2590), when we noted that “risk to GBP/USD appears to have shifted to the downside.” We also note that “as bearish momentum is only starting to build, any weakness is likely to face solid support at 1.2545 and 1.2500” GBP/USD broke below 1.2545 yesterday and fell to 1.2529. Given the increasing bearish momentum, GBP/USD looks likely to break 1.2500. However, keep in mind that there is another strong support level at 1.2470. Overall, only a break of 1.2640 (the “strong resistance” level was at 1.2680 yesterday) would suggest that downside risk has faded.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.