GBP/USD now focused on 1.2925/20 – UOB

FX Strategists at UOB Group noted that a break below 1.30 could lead to a test of the 1.2925/20 band.

Key Quotes

24-hour view: “The anticipated break of the major 1.3000 support did not materialize as GBP rebounded off a low of 1.3012. The recent downward pressure has clearly eased and GBP has likely moved into a consolidation phase. In other words, GBP is expected to trade sideways for now, likely between 1.3030 and 1.3110”.

Next 1-3 weeks: “While the bottom of our expected 1.3000/1.3250 consolidation range is still intact, the impulsive decline suggests further GBP weakness is likely in the coming days. As highlighted, “a break of 1.3000 would suggest that GBP is ready to tackle the 1.2922 low seen earlier this month” (even though the anticipated price action has evolved much faster than expected). In other words, instead of trading sideways, GBP has likely moved into a ‘negative’ phase. Only a break of the ‘key resistance’ at 1.3125 would indicate that the current downward pressure has eased”.