GBP/USD could visit 1.2740 – UOB

In view of FX Strategists at UOB Group, Cable’s outlook remains neutral and could drop to the 1.2740 area in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that “further GBP weakness would not be surprising but a break of 1.2800 is not expected”. In line with expectation, GBP dipped to a low of 1.2810 before rebounding strongly. Downward pressure has eased with the recovery and while there is room for GBP to rise further from here, a move beyond the 1.2920 resistance seems unlikely (1.2895 is already a relatively strong level). Support is at 1.2830 followed by the still solid level at 1.2800”.

Next 1-3 weeks: “GBP touched a low of 1.2810 yesterday, not too far from the bottom of our expected 1.2800/1.3010 consolidation range. Despite the bounce from the low, the underlying tone has weakened considerably. That said, we are not ready to adopt a bearish stance just yet even though there appears to be room for GBP to weaken further and test the 1.2740 support. At this stage, we do not anticipate a sustained decline below this level. All in, we expect GBP to stay under mild downward pressure for the next few days and only a break of 1.2975 would indicate that a short-term low is in place”.