GBP/USD could slip back to 1.2300 – UOB

FX Strategists at UOB Group believe Cable could attempt a test of the 1.2300 handle in the next 1-3 weeks.

Key Quotes

“While we expected GBP to edge lower to test the 1.2525 support, the sharp plunge that hit an overnight low of 1.2442 was clearly unexpected. The sharp drop appears to be running ahead of itself but with no signs of stabilization, further weakness towards 1.2370 seems likely (next support is at 1.2335)”.

“The sudden plunge in GBP yesterday was clearly unexpected. The break of 1.2465 indicates that the bullish phase that started last Monday has ended. The pullback from the 1.2615 high seen earlier this week appears to have scope to extend lower to 1.2300. At this stage, a sustained move below this level is not expected. All in, GBP is expected to stay under pressure from here unless it can move and stay above 1.2505 within these few days”.