GBP/USD still faces the next support at 1.1985 – UOB

In view of FX Strategists at UOB Group, Cable is expected to meet the next relevant support at 1.1985 in the next weeks.

Key Quotes

24-hour view: “While GBP tried to rally on Fri, the resistance at 1.2160 (high: 1.2168) held largely as expected. Undertone remains slightly negative and as long as 1.2190 holds any rallies, the bias is for GBP to drift lower. Downside is supported at 1.2100 and should it give way, 1.2060 would be of focus”.

Next 1-3 weeks: ““While we held the view yesterday (30 Jul, spot at 1.2225) that GBP has moved into a ‘negative phase’ and that it “could trade to 1.2110”, the subsequent rapid pace of decline was not exactly expected (GBP plunged to an overnight low of 1.2120). The downward acceleration over the past couple of days could be attributed to the lack of significant support levels. From here, if GBP were to crack 1.2110, it could lead to further steep decline as the next support is more than 100 pips lower at 1.1985. That said, 1.1985 is just a minor low in Jan 2017 (on the weekly chart) and it is left to be seen how much support it can offer (if GBP were to move to this level). Below this level, the more significant support would be the Oct 2016 ‘flash crash’ low of 1.1491. All in, despite being oversold, the current weakness in GBP is not showing sign of stabilizing just yet. Only a break of the 1.2260 ‘key resistance’ (level was at 1.2295 yesterday) would suggest that the decline in GBP is ready to take a breather.”