GBP/USD: Downward momentum loses impulse – UOB

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, prospects for extra downside in GBP/USD appears diminished for the time being.

Key Quotes

24-hour view: GBP closed slightly lower at 1.2721 yesterday (-0.22%). There is a slight increase in momentum, and GBP is likely to edge lower today. In view of the mild downward pressure, any decline is unlikely to break clearly below 1.2665. The major support at 1.2620 is unlikely to come under threat. On the upside, if GBP breaks above 1.2765 (minor resistance is at 1.2740), it would suggest that the current mild downward pressure has eased.   

Next 1-3 weeks: We have held a negative GBP view for more than a week now. In our most recent update from two days ago (08 Aug, spot at 1.2780), we noted that “downward momentum has eased further.” We held the view that “the chance for GBP to drop to 1.2580 has diminished.” We continue to hold the same view for now. Overall, only a breach of 1.2805 (‘strong resistance’ level previously at 1.2830) would indicate that the GBP weakness has stabilised.