GBP/USD unlikely to breach the 1.2500 handle – UOB

Cable’s outlook remains bearish although a break below the key support at 1.2500 the figure looks unlikely in the near term, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for GBP to move higher last Friday was incorrect as it broke several strong support levels with ease and plummet to 1.2580. While further weakness is not ruled out in the coming days, the current decline has moved deep into oversold territory and GBP is unlikely to weaken much from an intraday point of view. From here, GBP is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today, 1.2560/1.2630”.

Next 1-3 weeks: “After trading sideways and in relatively quiet manner for more than a week, GBP lurched lower and touched 1.2580 last Friday. The low is just above the bottom of our expected 1.2570/1.2770 sideway-trading range that we first indicated on (04 Jun, spot at 1.2665). From here, the ‘sideway-trading phase’ appears to have ended but despite the sharp drop of 0.64% last Friday, downward momentum has not improved by much. However, the underlying tone has clearly weakened and GBP is expected to trade with a downside bias. For now, we do not expect a break of the strong 1.2500 support. Only a move above 1.2680 would indicate that the current mild downward pressure has eased”.