GBP/USD risks extra pullbacks – UOB

Pablo Piovano FXStreet

FX Strategists at UOB Group noted Cable could extend the downside in the near term.

Key Quotes

24-hour view: “Expectation for sideways trading was wrong as GBP extended its decline and hit a low of 1.3996 last Friday. While clearly overextended, there is no sign of stabilization just yet and further weakness seems likely. However, in view of the severely oversold condition, the pace of any further decline would likely be slower and ‘limited’ to a test of the month-to-date low at 1.3965 (next support is at 1.3920). On the upside, only a move back above 1.4075 would indicate that the current weakness has stabilized (minor resistance is at 1.4045)”.

Next 1-3 weeks: “We highlighted last Friday that GBP is under pressure and further weakness towards 1.4000 seems likely. While our anticipation is correct, the rapid pace of the drop was not exactly expected as GBP hit a low of 1.3985 during NY hours. Despite the sharp decline, we continue to hold the view that the odds for a sustained break below the month-to-date low of 1.3965 are not high. That said, a break of this strong support would shift the focus to 1.3900. All in, we continue to expect GBP to stay under pressure unless it can reclaim 1.4130 (‘key resistance’ was at 1.4200 last Friday)”.

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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