GBP/USD sticks to the bearish stance – UOB

In view of FX Strategists at UOB Group, Cable’s outlook remains bearish in the near term, although a probable test of 1.2900 has lost momentum.

Key Quotes

24-hour view: “Expectation for sideways trading was wrong as GBP dropped and retested the 1.2950 support (low of 1.2952). Despite the bounce from the low, the undertone is still weak and a move below 1.2950 would not be surprising. However, the next support at near 1.2920 is unlikely to yield so easily (this level is followed by another strong support near 1.2900). On the upside, resistance is at 1.3000 but only a clear move back above 1.3030 would indicate that the current downward pressure has eased”.

Next 1-3 weeks: “GBP rebounded after retesting the 1.2950 support (overnight low of 1.2952). As indicated yesterday, while the bearish phase that started on Monday (07 Aug, spot at 1.3045) is still intact, patchy downward momentum suggests that the odds for further extension to 1.2900 are not high. However, confirmation of a short-term low is only upon a move back above 1.3060 (stop-loss adjusted lower from 1.3100). That said, in the event of a ‘clear and sharp’ break of 1.2900, the focus would shift to the July’s low near 1.2815”.