GBP/USD: Downside pressure alleviated above 1.2555 – UOB

Further decline in GBP/USD appears not favoured while above 1.2555, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: We expected GBP to consolidate in a range of 1.2455/1.2520 yesterday. However, it rebounded to a high of 1.2548. While the rebound lacks momentum, GBP could test 1.2555 before levelling off. GBP is unlikely to break clearly above 1.2555. Support is at 1.2480, followed by 1.2450. 

Next 1-3 weeks: We have expected GBP to weaken since early last week. In our most recent narrative from last Thursday (07 Sep, spot at 1.2500), we highlighted that GBP “is likely to continue to weaken, albeit at a slower pace.” We added, “The next major support at 1.2400 might not come into view so soon.” Yesterday, GBP rebounded to a high of 1.2548. Downward momentum has slowed, and the chance of GBP declining to 1.2400 seems low from here. On the upside, if GBP breaks above 1.2555 (no change in ‘strong resistance’ level), it would mean that GBP is not weakening further.