GBP/USD is now expected to navigate within the 1.2050-1.2245 range in the next weeks, suggest FX Strategists at UOB Group Quek Ser Leang and Peter Chia.
24-hour view: “The rapid drop in GBP to 1.2100 last Friday came as a surprise (we were expected GBP to trade between 1.2160 and 1.2240). Despite the decline, downward momentum is not strong. That said, there is scope for GBP to dip to 1.2090 first before a more sustained rebound is likely. The major support at 1.2050 is not expected to come under threat. On the upside, a breach of 1.2180 (minor resistance is at 1.2160) would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “After GBP soared to a high of 1.2277, we highlighted last Thursday (11 Aug, spot at 1.2215) that while the risk for GBP has shifted to the upside, it has to crack major resistance at 1.2300 before further sustained advance is likely. Last Friday, GBP dropped sharply and cracked our ‘strong support’ of 1.2125 (low of 1.2100). Upward momentum has dissipated and GBP is likely to trade sideways from here, expected to be within a range of 1.2050/1.2245.”