GBP/USD strong support lies at 1.2900 – UOB

Cable’s occasional pullbacks could face strong support in the 1.2900 neighbourhood in the near term, noted FX Strategists at UOB Group.

Key Quotes

“While we expected the strong support at 1.3000 to be ‘tested’, the ease of which this level is taken out and the subsequent sharp decline that hit a low of 1.2933 was unexpected. The down-move appears to be running ahead of itself and a retest of the 1.2933 low would not be surprising. That said, a clear break below the next support at 1.2900 seems unlikely. Resistance is at 1.3000 but only a move back above 1.3030 would indicate that the current weakness has stabilized”.

“Our recent bullish expectation was proven wrong as GBP cracked the 1.3000 stop-loss to hit a low of 1.2933. The outlook has shifted to neutral and this pair has likely moved into a consolidation phase. That said, the immediate bias for the next few days is tilted to the downside but at this stage, a sustained break below the expected 1.2870/1.3060 consolidation range is not expected”.