GBP/USD: further downside not ruled out – UOB

Pablo Piovano FXStreet

FX Strategists at UOB Group noted Cable is likely to remain sidelined for the time being, although a move lower should not be discarded.

Key Quotes

24-hour view: “Our view last Friday was that GBP “could breach the 1.2150 support but is unlikely to challenge 1.2125”. In line with expectation, GBP touched 1.2140 before recovering slightly. Downward momentum has improved albeit not by much. From here, GBP could probe 1.2125 but the next support at 1.2100 is unlikely to come into the picture. On the upside, only a move above 1.2215 (minor resistance is at 1.2190) would indicate the current downward pressure has eased”.

Next 1-3 weeks: “GBP dropped to 1.2140 last Friday (30 Aug) before closing lower for the third straight day (1.2166, -0.13%). The underlying tone has weakened somewhat but for now, we continue the view price action as part of a consolidation (see update on 29 Aug). That said, the soft underlying tone suggests GBP would likely test the bottom of the expected 1.2100/1.2250 range first (expected range narrowed from 1.2100/1.2300). Looking forward, only a NY closing below 1.2100 would suggest that GBP is ready to extend its weakness to 1.2050, possibly retesting the August’s low of 1.2015”.

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 drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.