GBP/USD: Chance Of A Drop To 1.2600 Is Low

Instead of further gains, GBP is more likely to trade between 1.2650-1.2705. Strategists at UOB Group note that the slowdown in GBP’s upward momentum suggests that the possibility of GBP weakening to 1.2600 is slim.

GBP likely to fluctuate between 1.2650-1.2705

24-hour view: “Yesterday, we argued that GBP ‘could fall to 1.2600’ before the risk of a rebound increases. However, after falling to a low of 1.2633, GBP rebounded strongly, reaching a high of 1.2698. GBP’s strong rebound seems to have been overdone, and instead of further gains today, GBP is more likely to trade between 1.2650-1.2705.

1-3 week view: “We highlighted yesterday (June 24, current price 1.2640) that GBP ‘could continue to weaken to 1.2600’. We

also highlighted that ‘only a break above 1.2705 would mean GBP weakness has stabilized’. GBP subsequently rebounded strongly, reaching as high as 1.2698. While our ‘strong resistance’ level of 1.2705 has not yet been broken, the slowing momentum suggests that a drop to 1.2600 is unlikely. Looking ahead, a break above 1.2705 would suggest that GBP’s decline from early last week has stabilized and GBP may trade in a range.

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