GBP/USD weaker, now looks to 1.2165 – UOB

Cable remains under pressure and could slip back to the 1.2165 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but were of the view that it is likely to ‘edge below 1.2400’. Instead of ‘edging lower’, GBP plunged to a low of 1.2248 before settling at 1.2300 (-1.05%). The sharp and rapid decline appears to be running ahead of itself but downward momentum is still strong and there is room for another down-leg towards 1.2220 first before the current weakness should stabilize. Resistance is at 1.2340 followed by 1.2370.”

Next 1-3 weeks: “We highlighted last Thursday (16 Apr, spot at 1.2500) that GBP has posted a short-term top at 1.2648. We expected GBP to ‘move lower’ but held the view that GBP is ‘unlikely to move clearly below 1.2300’. While we got the direction of the movement right, we did not anticipate the ease by which GBP plunged below 1.2300 yesterday (low of 1.2248). The previously lackluster momentum is given a strong boost and from here GBP could weaken further towards the month-to-date low near 1.2165. On the upside, only a move above 1.2420 (‘strong resistance’ level) would indicate the current downward pressure has eased.”