GBP/USD outlook shifted to bearish from neutral – UOB

FX Strategists at UOB Group has shifted their outlook on the pair to bearish from neutral in the near term.

Key Quotes

24-hour view: “We expected GBP to ‘retest’ 1.3855/60 yesterday but it crashed through this strong support and plunged to a low of 1.3757. Downward momentum remains strong and further weakness is expected towards 1.3700. The next support at 1.3660 is likely out of reach for now. On the upside, the ‘break-down’ level of 1.3855/60 is expected to be strong enough to cap any intraday recovery (minor resistance is at 1.3800)”.

Next 1-3 weeks: “The sudden plunge in GBP yesterday (due to bad-Brexit news) was clearly not expected. The crack of the major 1.3764 support indicates that the month-long neutral outlook has shifted to bearish. The sharp and swift drop appears to be running ahead of itself but there is room for further extension to 1.3660 (next support is at 1.3530). Only a move back above 1.3890 (‘stop-loss’ level) would indicate that our view is wrong. On a shorter-term note, 1.3855/60 is already a strong resistance”.