According to UOB Group currency strategists Lee Sue Ann and Quek Ser Leang, A drop below 1.1800 in GBP/USD remains likely short term.
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24 hour view: “We were expecting GBP/USD to decline yesterday, but were of the opinion that ‘any weakness could be limited to a test of 1.1850’. We noted that ‘major support at 1.1800 is unlikely to be threatened’. The expected weakness exceeded our expectations as GBP/USD tumbled to a low of 1.1808 before bouncing to end the day little changed at 1.1885 (-0.08%) Rebound amid oversold conditions suggests GBP/USD is unlikely to weaken more. For today, GBP/USD is more likely to trade between 1.1825 and 1.1925.”
Next 1 to 3 weeks: “Yesterday (July 12, GBP/USD at 1.1910) we turned negative on GBP/USD and indicated that it could trade with a bearish bias towards 1.1800. Our view of a weaker GBP/USD was not wrong, but we did not expect that approached 1.1800 so quickly (GBP/USD fell to 1.1808 during London hours.) Although the bearish momentum hasn’t improved much, the chance of GBP/USD breaking 1.1800 has increased.A break of 1.1800 would change focus towards 1.1750. Downside risk is intact as long as GBP/USD does not move above 1.1980 (‘strong resistance’ level was 1.2010 yesterday).”
Source: Fx Street
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