GBP/USD: Bulls push to test 1.2780 – UOB Group

Oversold decline has not stabilised; the Pound Sterling (GBP) could drop further to 1.2645. The next major support at 1.2610 is highly unlikely to come into view, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.

GBP may test 1.2780 in short term

24-HOUR VIEW: “We did not anticipate GBP to drop sharply to 1.2674 yesterday (we were expecting sideways trading). While the decline is oversold, it has not stabilised. Today, GBP could drop to 1.2645 before stabilisation can be expected. The next major support at 1.2610 is highly unlikely to come into view. Resistance is at 1.2710; a breach of 1.2735 would suggest that the weakness in GBP has stabilised.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since 26 Jul, when it was trading at 1.2855. After GBP tested the 1.2710 level twice and rebounded, we indicated yesterday (06 Aug, spot at 1.2790) that ‘downward momentum has slowed, and there is a low confidence of a sustained break below 1.2710.’ However, GBP lurched lower in London trade, broke below 1.2710, reaching a low of 1.2674. The rejuvenated momentum indicates that the risk remains on the downside. The levels to watch are 1.2645 and 1.2610. The latter level is solid support (near June’s low). The downside risk will remain intact as long as 1.2780 (‘strong resistance’ level previously at 1.2840) is not breached.”