GBP/USD risks a deeper pullback in the near-term – UOB

Pablo Piovano FXStreet

Cable remains under pressure and risks extra retracements in the near-term, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden and sharp plunge in GBP last Friday came as a surprise as it cracked several strong support levels with ease and hit a 4- 1/2 -month low of 1.2726 before rebounding. While further GBP weakness appears likely in the days ahead, the rapid short-term drop is running ahead of itself. From here, GBP is expected to consolidate and trade between 1.2735 and 1.2855.”

Next 1-3 weeks: “While we indicated last Friday that a ‘NY close below 1.2800 would suggest GBP is ready to embark of a sustained decline’, we were of the view ‘the prospect for such a scenario is low for now’. However, GBP sliced through 1.2820 and plunged to a 4-1/2 -month low of 1.2726 before snapping back up to end the day at 1.2821 (-0.48%). The break of 1.2820 has exposed the downside in GBP even though 1.2700 is a strong support and may not come into the picture so soon. To look at it another way, GBP could consolidate for a couple of days first before making a run for 1.2700. On the upside, only a move above 1.2900 (‘strong resistance’ level) would indicate that GBP is not ready to move lower just yet.”

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.

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