GBP/USD faces further consolidation near term – UOB

In the view of UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, GBP/USD is seen navigating within the 1.2180-1.2400 range in the short-term horizon.

Key Quotes

24-hour view: We did not anticipate the sharp drop in GBP that reached a low of 1.2213 (we were expecting it to trade sideways). While the sharp drop appears to be overdone, there is room for GBP to weaken further. In view of the oversold conditions, a sustained drop below 1.2180 appears unlikely (next support is at 1.2140). Resistance is at 1.2245, followed by 1.2270. 

Next 1-3 weeks: We continue to hold the same view as yesterday (09 Nov, spot at 1.2285). As highlighted, GBP is likely to trade in a range of 1.2180/1.2400 for now. However, short-term downward momentum has improved somewhat, and the risk of GBP breaking below 1.2180 has increased. That said, it is worth noting that there is another strong support level at 1.2140. To put it another way, a sustained decline in GBP appears unlikely.