GBP/USD faces downside risks – UOB

Cable is likely to trade within a consolidative note in the near term although a move lower has not been ruled out, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Instead of “edging lower towards 1.2430”, GBP cracked the support level with ease and dropped to 1.2413. Downward momentum has picked up and the risk for today is tilted to the downside. From here, barring a move back above 1.2465 (minor resistance at 1.2450), GBP could extend its decline to last week’s low near 1.2395”.

Next 103 weeks: “We warned yesterday (23 Sep, spot at 1.2470) that the “odds for further GBP have diminished” and the subsequent break of the ‘strong support’ at 1.2430 (low of 1.2413) indicates that the recovery phase that started more than 2 weeks ago (05 Sep, spot at 1.2245) has ended. Last Friday (20 Sep) high of 1.2582 is deemed as a short-term top. While GBP is expected to trade below the short-term top for the next 1 to 2 weeks, any weakness is viewed as part of consolidation phase and it is too soon to expect a significant pull-back. To look at it another way, GBP is expected to trade sideways to slightly lower for now, expected to be within a 1.2300/1.2520 range”.