GBP/USD: Extra gains seen below 1.2240 – UOB
|Cable could accelerate the downside on a close below 1.2240 in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “The sudden lurch lower in GBP that sent it tumbling by -0.63% (1.2333) came as a surprise. The rapid decline appears to be running ahead of itself but with no sign of stabilization just yet, GBP could test last week’s low at 1.2266. For today, a sustained decline below this level is unlikely (next support 1.2240). Resistance is at 1.2340 followed by 1.2365.”
Next 1-3 weeks: “We highlighted last Friday (08 May, spot at 1.2390) that ‘1.2644 could be a short-term top’ but held the view that ‘it is too early to expect a sustained decline’. We added, GBP “is more likely to consolidate and trade between 1.2280 and 1.2500”. The rapid manner by which GBP is approaching the bottom of the range at 1.2280 (overnight low of 1.2283) is not exactly expected. The price action has resulted in a quick pick-up in momentum and from here, if GBP posts a NY closing below 1.2240, it would indicate the start of a sustained down-move (that potentially could move below last month’s 1.2166 low). At this stage, the prospect for such a move is not that high but it would continue to improve as long as GBP does not move above 1.2410 within these 1 to 2 days.”
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