GBP/USD: Extra downside faces support around 1.2720 – UOB

Further selling pressure in GBP/USD is expected to meet a tough support around 1.2720, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: After GBP dropped to 1.2767 last Friday and rebounded, we highlighted yesterday that “despite the strong rebound, there is no clear increase in momentum, and GBP is unlikely to rise further.” We expected GBP to trade sideways between 1.2810 and 1.2910. In line with our view, GBP traded sideways, albeit in a much narrower range than expected (1.2829/1.2872). Momentum indicators are mostly flat, and further sideways trading appears likely. Expected range for today; 1.2795/1.2865. 

Next 1-3 weeks: Our update from last Friday (28 Jul, spot at 1.2800) still stands. As highlighted, “downward momentum is building again, it remains to be seen if GBP can break the major support at 1.2720.” All in all, we expect GBP to trade with a downward bias as long as it stays below 1.2900 (‘strong resistance’ level previously at 1.2930).