GBP/USD: Expectations Dim for a Drop to 1.0000 – UOB

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In the opinion of UOB Group Currency Strategists Quek Ser Leang and Peter Chia, the probability of GBP/USD falling to the parity zone seems to have run out of steam for now.

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24 hour view: “Yesterday, we held the view that GBP/USD “is likely to go lower, but a sustained drop below 1.0630 is unlikely.” We did not expect such a volatile move, as GBP/USD dipped briefly to 1.0539 earlier to spike to a high of 1.0917 during NY hours. Further volatility not ruled out, though likely within a narrower range of 1.0670/1.0970.”

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Next 1-3 weeks: “Three days ago (Sep 26, GBP/USD at 1.0600), we highlighted that in view of the impulsive downward acceleration since last Friday, a further decline of GBP/USD to 1.0000 is not ruled out. Yesterday (Sep 28 September), GBP/USD reached a high of 1.0917.The downward momentum has subsided and a break of 1.1000 (no change in yesterday’s “strong resistance” level) would indicate that GBP/USD’s weakness since 2 weeks has stabilized. All in all, after yesterday’s price movement, the probability of GBP/USD falling to 1.0000 this time has decreased considerably.”

Source: Fx Street

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