GBP/USD: A breach of 1.2500 looks imminent – UOB

Pablo Piovano FXStreet

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, GBP/USD does not rule out a break below the 1.2500 support in the near term.

Key Quotes

24-hour view: Our view for GBP to trade in a range yesterday was incorrect, as it fell to a low of 1.2529 and then rebounded to end the day at 1.2564 (0.51%). While the rebound in oversold conditions has caused momentum to slow, it is too early to expect a bottom. Today, as long as GBP stays below 1.2615 (minor resistance is at 1.2590), it might drop further. In view of the oversold conditions, a clear break of 1.2500 is unlikely.

Next 1-3 weeks: Our most recent narrative was from two days ago (04 Sep, spot at 1.2590), when we highlighted that “the risk for GBP appears to have shifted to the downside.” We also highlighted that “as downward momentum is only beginning to build, any weakness is likely to face solid support at 1.2545 and 1.2500.” Yesterday, GBP broke below 1.2545 and dropped to 1.2529. In view of the increase in downward momentum, it seems likely that GBP will break 1.2500. However, it bears noting that there is another strong support level at 1.2470. Overall, only a breach of 1.2640 (‘strong resistance’ level was at 1.2680) would suggest that the downside risk has faded.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD flirts with daily tops near 1.1650 ahead of Fed

EUR/USD manages to regain the smile on Wednesday, trading with decent gains around 1.1650, or daily peaks. The pair's daily advance comes in response to further losses in the US Dollar as market participants get ready for the upcoming FOMC gathering, where the Fed is widely expected to lower its interest rates by a quarter point.

GBP/USD advances to 1.3350 amid USD selling

GBP/USD sets aside two daily declines in a row and manages to regain some balance beyond the 1.3300 hurdle on Wednesday. The better tone around Cable follows the renewed downside bias in the Greenback ahead of the much awaited interest rate decision by the Federal Reserve.

Gold aims north ahead of Fed’s announcement

Gold is a touch softer on Wednesday, even with the US Dollar easing and US Treasury yields reversing part of their recent robust multi-day recovery. The yellow metal remains cautious ahead of the widely expected 25 bps rate cut from the Fed and the release of an updated "dots plot".