GBP/USD: A drop to 1.2350 appears on the cards – UOB
|Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest GBP/USD could weaken further and revisit the mid-1.2300s in the near term.
Key Quotes
24-hour view: “Our view for GBP to consolidate yesterday was incorrect as it plummeted to 1.2392 before recovering slightly to end the day at 1.2409 (0.63%). Today, as long as it stays below 1.2460 (minor resistance is at 1.2440), it could break the major support at 1.2390. In view of the oversold conditions, the next major support at 1.2350 is unlikely to come into view today.”
Next 1-3 weeks: “One week ago, 12 May, when GBP was trading at 1.2515, we indicated that ‘GBP strength has ended and the downside risk is building quickly’. We added, ‘If GBP breaks below 1.2445, it could trigger a rapid decline to 1.2390’. While GBP took out 1.2445, the anticipated ‘rapid decline’ did not materialize. On Monday (15 May, spot at 1.2455), we highlighted that GBP ‘is likely to weaken further to 1.2390 but oversold short-term conditions could slow the pace of any further decline’. Yesterday (18 May), GBP dropped to within a couple of pips of 1.2390 (low of 1.2392). GBP is likely to weaken further; a clear break of 1.2390 will suggest it could drop to 1.2350, as low as 1.2300. On the upside, a breach of 1.2500 (‘strong resistance’ level previously at 1.2560) would indicate that GBP is not weakening further.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.