GBP/USD now looks to a test of 1.1680 – UOB

FX Strategists at UOB Group Quek Ser Leang and Peter Chia noted GBP/USD could slip back to the 1.1680 region in the next few weeks.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘could drop further but a sustained decline below July’s low near 1.1760 appears unlikely for now’. GBP subsequently dropped to dropped to 1.1744 before closing at 1.1768 (-0.55%). Downward momentum has waned a tad and while GBP could dip below the major support at 1.1730, it is unlikely able to maintain a foothold below this level. The next support is at 1.1680. Resistance is at 1.1795 followed by 1.1825.”

Next 1-3 weeks: “Yesterday (22 Aug, spot at 1.1825), we highlighted that the pace of any further GBP decline is likely to be at a slower pace and 1.1730 is expected to offer solid support. We did not anticipate the subsequent sharp drop as GBP closed lower for the fourth straight day (1.1768, -0.55%). Despite the decline, downward momentum has not improved by much. That said, there is scope for GBP to edge lower towards 1.1680. Resistance is at 1.1825 but only a break of 1.1875 (‘strong resistance’ level was at 1.1935 yesterday) would indicate that the current GBP weakness has stabilized.