GBP/USD could drop and revisit the 1.2040 zone in the coming weeks, suggest UOB Group currency strategists Lee Sue Ann and Quek Ser Leang.
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24 hour view: “Yesterday we highlighted that ‘the rapid decline in GBP/USD appears to have room to break major support at 1.2165’. We added that ‘oversold conditions suggest the next support at 1.2120 is unlikely to enter the picture’. Our view of weaker GBP/USD was not wrong, although the magnitude of the decline exceeded our expectations as GBP/USD fell sharply to 1.2106 Although GBP/USD could weaken further, conditions remain oversold and support next at 1.2040 is probably out of reach for now. To the upside, a break of 1.2175 (minor resistance is at 1.2150) would indicate current weakness has stabilized.”
Next 1-3 weeks: “Yesterday (June 29, GBP/USD at 1.2185), we indicated the recent consolidation phase. We highlighted that the downward momentum is only starting to build and any weakness from here could be limited to 1.2120 for now. Although our opinion on weaker GBP/USD was correct, the pace of the decline was faster than expected as GBP/USD tumbled to a low of 1.2106.The bearish momentum has improved considerably and GBP/USD could move lower until the next support at 1.2040. To the upside, the break of the ‘strong resistance’ at 1.2205 (1.2285 yesterday’s level) would indicate that the current bearish pressure has eased.”
Source: Fx Street
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