GBP/USD downside could slow the pace near term – UOB

Cable’s decline towards fresh yearly lows appears somewhat unlikely, at least in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sharp decline in GBP that sliced through last month’s 1.2507 low came as a surprise (low of 1.2481 last Friday). The subsequent sharp bounce from the low amidst oversold conditions suggests 1.2481 could be a short-term bottom. That said, it is too early to expect a sustained rebound. GBP is more likely to consolidate its loss and trade sideways at these lower levels, expected to be within a 1.2490/1.2560 range”.

Next 1-3 weeks: “Instead of “probing the bottom of the expected sideway-trading phase first” (our view since last Tuesday, 02 Jul, spot at 1.2645), GBP plunged last Friday (05 Jul) and cracked June’s low of 1.2507 and hit 1.2481. The rapid improvement in downward momentum came as a surprise. While the focus from here is clearly at the year-to-date low of 1.2409 (registered in early January), the odds for a move to this level are not high for now (there is a relatively strong support at 1.2440). That said, GBP is expected to stay under pressure unless it can move above 1.2590”.