GBP/USD a test of 1.2300 stays on the cards – UOB

In opinion of FX Strategists at UOB Group, Cable could still slip back towards the 1.2300 handle in the next weeks.

Key Quotes

“GBP rebounded quickly without testing the 1.2370 support (low of 1.2377). The sharp drop over the past two days is showing sign of stabilizing and the downside risk appears to be limited from here. That said, a dip to 1.2405/10 would not be surprising but 1.2370 is expected to hold for a recovery to 1.2485/90”.

“We shifted from a bullish to a neutral stance yesterday and there is no change to the view. The current movement is viewed as a corrective pull-back which has scope to extend lower to 1.2300. At this stage, a sustained move below this level is not expected. All in, GBP is expected to stay under pressure from here unless it can move and stay above 1.2505 within these few days”.