GBP/USD: Set to break below 1.2780 – UOB Group
|The Pound Sterling (GBP) could break above 1.2900, but it might not be able to maintain a foothold above this level, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Bears may try to test 1.2780
24-HOUR VIEW: “We did not anticipate GBP to surge yesterday, as it registered its biggest 1-day gain in four months (1.2862, +0.76%). We were expecting sideways trading. While GBP could rise further today and break above 1.2900, oversold conditions suggest it might not be able to maintain a foothold above this level. The next resistance at 1.2950 is unlikely to come into view. On the downside, support levels are at 1.2845 and 1.2820.”
1-3 WEEKS VIEW: “After holding a negative GBP view since late last month, we turned neutral yesterday (13 Aug, spot at 1.2765), indicating that ‘the weakness from late last month has stabilised.’ We expected GBP to ‘trade between 1.2700 and 1.2850 for the time being.’ We did expect GBP to break quickly above 1.2850, as it soared to a high of 1.2873 in NY trade. The price action indicates that instead of trading in a range, GBP is likely to rebound further, potentially to 1.2950. However, note that 1.2900 is also quite a strong resistance level. To keep the momentum going, GBP must not break below 1.2780 (current level of ‘strong support’).”
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