GBP/USD further weakness expected – UOB

In opinion of FX Strategists at UOB Group, Cable is seen grinding lower in the next weeks.

Key Quotes

“GBP rebounded directly without testing the strong 1.2350 support first (low of 1.2408). The recovery appears to have scope to extend further but at this stage, any up-move is unlikely to have enough momentum to challenge the major 1.2530 resistance (minor resistance at 1.2500)”.

“As highlighted yesterday, the immediate downward pressure is expected to increase unless GBP can reclaim the key short-term resistance at 1.2530 (overnight high has been 1.2482). To put it another way, we continue to see early and tentative signs that the recent prolonged consolidation could be resolved with a downside ‘break’. That said, GBP has to move clearly below 1.2350 to indicate that a sustained down move towards 1.2250 has started. Minor support is at 1.2405.