GBP/USD risks a probable drop to 1.2580 – UOB
|Further losses now appear on the table for GBP/USD in the short-term horizon, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.
Key Quotes
24-hour view: After GBP fell sharply to 1.2680 on Wednesday, we highlighted yesterday that “While severely oversold, there appears to be enough momentum for GBP to dip below 1.2680.” We added, “The major support at 1.2645 is likely out of reach today.” However, GBP plummeted to 1.2620 in London trade, then snapped back up to close largely unchanged in NY (1.2709, -0.09%). Downward momentum has slowed, and this combined with still overbought conditions, suggests GBP is unlikely to weaken further. Today, GBP is more likely to trade sideways in a range of 1.2670/1.2770.
Next 1-3 weeks: We turned negative in GBP last Friday (28 Jul, spot at 1.2800). In our update from yesterday (03 Aug, spot at 1.2725), we held the view that GBP “is likely to weaken further.” We indicated that “the next level to aim for is 1.2640, followed by 1.2580.” GBP broke below 1.2640 in London trade (low was 1.2620). While downward momentum has eased somewhat with the bounce from the low, there is a chance for GBP to drop to 1.2580. Overall, only a breach of 1.2805 (‘strong resistance’ level was at 1.2830) would indicate that the downside risk has faded.
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.