According to UOB Group currency strategists Lee Sue Ann and Quek Ser Leang, GBP/USD risks a deeper pullback if the 1.2000 level is broken.
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24 hour view: “We did not expect GBP/USD’s sharp drop to 1.2004 last Friday and subsequent strong rebound from the low. Despite the strong rebound, the immediate pressure remains to the downside. Although there is room for GBP/USD to weaken , major support at 1.2000 (minor support is 1.2025) is unlikely to be broken. To the upside, breakout of 1.2115 (minor resistance is 1.2085) would indicate current bearish pressure has eased.”
Next 1 to 3 weeks: “Our last story was Wednesday (Aug 3, GBP/USD at 1.2160), where GBP/USD is in a consolidation phase and is likely to trade in a range of 1.2040/1.2255. On Friday (Aug 5) GBP/USD broke 1.2040 and fell to 1.2004 Short-term bearish momentum is starting to improve and GBP/USD risk is tipped to the downside That being said, GBP/USD has to break major support at 1.2000 before a sustained decline is likely. Overall, only a break of 1.2155 (‘strong resistance’ level) would indicate downside risk has dissipated.”
Source: Fx Street
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