According to Peter Chia and Quek Ser Leang, currency strategists at UOB group, the GBP/USD it has the potential to drop further and revisit the 1.2250 region in the coming weeks.
24 hour outlook: “Yesterday we highlighted that the British pound could advance to 1.2660 for the first time before moderating. The GBP subsequently rose to 1.2637 before making a sharp drop that sent it to a low of 1.2325. As long as it is deeply oversold, the pound weakness has room to extend to 1.2300 before likely stabilization (next support at 1.2250 may be under threat). Resistance is found at 1.2420, followed by 1.2460″.
Next 1-3 weeks: “We highlighted yesterday (05 May, pair at 1.2620) that the British pound had entered a consolidation phase and was likely to move within a range of 1.2520/1.2720. The subsequent drop of 2.22% (biggest drop in a day since March 2020) came as a surprise The quick and strong momentum suggests that the pound sterling could weaken further. next support is at 1.2250. To the upside, a break of 1.2500 would indicate that the current strong bearish pressure has eased.”
Source: Fx Street
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