GBP/USD room for a move to 1.2140 – UOB
Cable is still expected to resume the downside and drop to the 1.2140 region in the short-term horizon, suggested FX Strategists at UOB Group.
24-hour view: “Instead of “weaken further”, GBP spiked to 1.2292 before dropping back quickly to end the day largely unchanged at 1.2205 (-0.09%). While downward pressure has eased, there is scope for GBP to drift lower to 1.2180. For today, a sustained decline below this level is unlikely. Resistance is at 1.2250 followed by 1.2275. The high near 1.2290 is likely ‘safe’ for today”.
Next 1-3 weeks: “The sudden lurch lower and the ease by which GBP cracked the 01 Oct low of 1.2205 came as a surprise (overnight low of 1.2195). The price action indicates that the sideway-trading phase that started last Friday (04 Oct, spot at 1.2335) ended sooner than expected. From here, GBP is expected to trade with a downward bias towards 1.2140. At this stage, it is too early to expect a sustained decline below this level (momentum is not as strong as preferred). All in, GBP is expected to stay under pressure unless it can move above the ‘strong resistance’ level of 1.2300”.