GBP/USD: Downside pressure gains momentum – UOB

Cable remains focused on the 1.3790 level for the time being, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that “while the risk is still on the downside, downward momentum has not improved by much and a break of the major support at 1.3790 is unlikely”. Our view was not wrong as GBP dropped to 1.3799 before rebounding. Despite the rebound, we see chance for GBP to dip below 1.3790. That said, major support at 1.3750 is not expected to come into the picture. Resistance is at 1.3850 followed by 1.3870.”

Next 1-3 weeks: “Our update from yesterday (30 Jun, spot at 1.3840) still stands. As highlighted, downward momentum is beginning to improve but only a NY closing below 1.3790 would indicate the start of a fresh weak phase in GBP. The prospect for such a move has increased and only a break of 1.3905 (no change in ‘strong resistance’ level) would indicate that the risk of sustained decline in GBP has dissipated. Looking ahead, the next major support levels below 1.3790 are at 1.3750 and 1.3715.”