No change in GBP/USD. Still eyes a move to 1.1985 – UOB

The near term view on Cable stays bearish amidst the steady chance of a visit to sub-1.2000 levels in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “As expected, GBP continues to be ‘stable’ overnight, trading in a narrow range between 1.2123 and 1.2191. Today, sideways trading should persist with strong support still at 1.2100 while resistances at 1.2185 and 1.2210 are still expected to limit price advances”.

Next 1-3 weeks: “While we held the view yesterday (30 Jul, spot at 1.2225) that GBP has moved into a ‘negative phase’ and that it “could trade to 1.2110”, the subsequent rapid pace of decline was not exactly expected (GBP plunged to an overnight low of 1.2120). The downward acceleration over the past couple of days could be attributed to the lack of significant support levels. From here, if GBP were to crack 1.2110, it could lead to further steep decline as the next support is more than 100 pips lower at 1.1985. That said, 1.1985 is just a minor low in Jan 2017 (on the weekly chart) and it is left to be seen how much support it can offer (if GBP were to move to this level). Below this level, the more significant support would be the Oct 2016 ‘flash crash’ low of 1.1491. All in, despite being oversold, the current weakness in GBP is not showing sign of stabilizing just yet. Only a break of the 1.2260 ‘key resistance’ (level was at 1.2295 yesterday) would suggest that the decline in GBP is ready to take a breather.”