Further GBP/USD weakness should not be ruled out for nowaccording to Lee Sue Ann, Economist at UOB Group, and Quek Ser Leang, Market Strategist.
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24 hour view: Yesterday we expected GBP/USD to “keep falling”. However, we highlight that “a sustained break below 1.2470 is unlikely, and the next major support at 1.2400 is very likely out of reach today.” GBP/USD fell more than expected as it dipped as low as 1.2445 before ending the day softer at 1.2475 (-0.26%). Although the bearish momentum has not improved much, GBP/USD could continue to fall. That being said, the main support at 1.2400 is unlikely to be threatened. To maintain momentum GBP/USD needs to stay below 1.2510 (minor resistance is at 1.2490).
Next 1-3 weeks: We continue to hold the same view as yesterday (Sep 7, GBP/USD at 1.2500). As we have highlighted, we continue to expect GBP/USD to weaken. However, near-term oversold conditions could slow the pace of any further decline, and the next major support at 1.2400 may not appear as soon. Overall, only a break of 1.2555 (the “strong resistance” level was at 1.2605 yesterday) would suggest that the GBP/USD weakness started on Monday has stabilized. Looking ahead, if GBP/USD were to clearly break below 1.2400, it could trigger a further decline towards 1.2310.
Source: Fx Street
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