GBP/USD bearish now, scope for a visit to 1.2955 – UOB

Cable is expected to slip back to the mid-1.2900s in the next 1-3 weeks, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “The anticipated weakness in GBP exceeded our expectation by breaching several strong supports with ease (low of 1.3025). While approaching oversold, there is scope for another push lower to test the strong level of 1.3000 (next support at 1.2955 unlikely to come into the picture). Resistance is at 1.3090 followed by 1.3125. The 1.3164 high seen last Friday is not expected to be challenged anytime soon”

Next 1-3 weeks: “We shifted from a bullish to neutral stance last Friday (04 Aug) and held the view that GBP is under pressure unless it can reclaim 1.3220. However, the sharp decline that easily took out the strong 1.3075 support came as a surprise (low of 1.3024 last Friday). While the drop appears to be over-extended, there is room for extension to 1.2955 (with strong ‘intervening’ support at 1.3000). On the upside, only a move back above 1.3165 would indicate that our bearish view is wrong. Those looking to sell may like to wait for a bounce to 1.3090 to enter short with a 1.3165 stop-loss”.