GBP/USD: Still scope for a move to 1.2305 – UOB

The continuation of the selling pressure could drag GBP/USD to the 1.2300 region in the near term, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: We highlighted yesterday that GBP “could edge lower, but any decline is likely part of a lower range of 1.2355/1.2415.” However, GBP traded in a range of 1.2372/1.2425 before ending the day little changed at 1.2392 (+0.06%). The price action offers no fresh clues. Today, we continue to expect GBP trade in a range of 1.2355/1.2415. 

Next 1-3 weeks: Our most recent narrative was from last Friday (15 Sep, spot at 1.2405), wherein the weakness in GBP has not stabilised, and GBP could continue to weaken. We pointed out that “The next level to watch is May’s low near 1.2305.” We continue to hold the same view. However, it is worth noting that downward momentum is beginning to slow. If GBP breaks above 1.2455 (no change in ‘strong resistance’ level), it would mean that the weakness in GBP that started more than two weeks ago has stabilised.