GBP/USD: A retracement to the parity zone looks on the cards – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggest further downside could see GBP/USD visiting the key parity region.

Key Quotes

24-hour view: “Yesterday, we held the view that GBP ‘could continue to trade in a choppy manner and likely within a wide range of 1.0600/1.0900’. However, GBP traded within a narrower range than expected (1.0651/1.0837). The underlying tone has softened and GBP is likely to edge lower for today. That said, a sustained decline below 1.0630 is unlikely. Resistance levels are at 1.0780 and 1.0830.”

Next 1-3 weeks: “On Monday (26 Sep, spot at 1.0600), we highlighted that in view of the impulsive downward acceleration from last Friday, a further decline in GBP to 1.0000 is not ruled out. There is no change in our view. However, deeply oversold short-term conditions suggest GBP could trade above Monday’s low of 1.0327 for a few days first. On the upside, a break of 1.1000 (no change in ‘strong resistance’ level from yesterday) would indicate that the weakness in GBP from 2 weeks ago has stabilized.”