Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group note GBP/USD could slip back to the 1.2000 region in the short-term horizon.

Key Quotes

24-hour view: We indicated yesterday that “the severely oversold GBP has room to weaken further; the major support at 1.2000 is likely out of reach for now.” We also indicated that “there is another support at 1.2050.” GBP weakened less than expected as it dipped to 1.2054 before ending the day largely unchanged at 1.2078 (-0.08%). The price action appears to be consolidative, and GBP is likely to trade in a range today, probably between 1.2050 and 1.2105. 

Next 1-3 weeks: There is not much to add to our update from yesterday (03 Oct, spot at 1.2090). As we pointed out, the recent GBP weakness has resumed, likely towards 1.2000. In order to maintain the momentum buildup, GBP must not move above 1.2160 (‘strong resistance’ level was at 1.2190 yesterday).