GBP/USD risks a drop to the 1.2120 region – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggested GBP/USD faces a potential decline to the 1.2120 area in the next few weeks.

Key Quotes

24-hour view: “Our expectations for GBP to ‘trade within a range of 1.2235/1.2330’ was incorrect as it dropped sharply to 1.2181 before closing on a soft note at 1.2184 (-0.66%). While the rapid decline appears to have room to break the major support at 1.2165, oversold conditions suggest that the next support at 1.2120 is unlikely to come into the picture. Resistance is at 1.2225 followed by 1.2255.”

Next 1-3 weeks: “We have held the same view since early last week where the outlook for GBP is mixed and we expect GBP to range-trade. After trading sideways and closing around 1.2265/1.2275 for several days, GBP plummeted to a low of 1.2181 during NY session. While the consolidation phase appears to have ended, downward momentum is only beginning to build and any weakness from here could be limited to 1.2120 for now. On the upside, a break of the ‘strong resistance’ level, currently at 1.2285 would indicate that the downward bias has eased.”