GBP/USD: Risk Of A Drop Towards 1.2550

GBP/USD is expected to trade between 1.2620-1.2670 as downside momentum gathers momentum again. Analysts at UOB Group note that the next level to watch is 1.2550.

Next level to watch is 1.2550

24-hour view: “We highlighted yesterday that GBP could fall below 1.2600. ‘Oversold conditions suggest that GBP is unlikely to reach the next important support level of 1.2550’. However, after falling to a low of 1.2613, GBP rebounded strongly to 1.2670 before retreating and closing at 1.2639 (+0.14%). The price action is likely to be part of a sideways phase. Today, we expect GBP to trade between 1.2620 and 1.2670.

1-3 week view: “We have maintained a negative view on GBP since the beginning of last week. Following the sharp fall in GBP two days ago, we highlighted yesterday (June 27, now at 1.2620) that ‘downward momentum is building again and a break above 1.2600 would not be surprising’. We also highlighted that “the next focus below 1.2600 is 1.2550. We did not expect such a strong bounce, approaching our ‘strong resistance’ level of 1.2680 (high of 1.2670). While we still hold the same view, we have raised our ‘strong resistance’ to 1.2800 given the increased volatility.”

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