GBP/USD faces downside pressure near term – UOB

Despite the ongoing consolidation, Cable could accelerate the decline and test the 1.2770 region in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Instead of “trading sideways”, GBP dipped to 1.2845 before ending the day on a soft note at 1.2857 (-0.19%). Downward momentum has picked up slightly and from here, GBP could drift lower to 1.2835. The next support at 1.2800 is not expected to come into the picture. Resistance is at 1.2880 but only a move above 1.2900 would indicate the current mild downward pressure has eased”.

Next 1-3 weeks: “Our view from last Tuesday (29 Oct, spot at 1.2855) wherein the 21 Oct peak of 1.3012 is a “short-term top” and GBP is “expected to trade sideways” still stands (note that current spot level of 1.2860 is very close to last Tuesday’s). That said, after more than a week of trading sideways, the underlying tone has weakened and the risk has shifted slightly to the downside. While the current price action is still viewed as a sideway-trading phase, GBP is likely to probe the bottom of the 1.2770/1.2930 range first (expected range adjusted from 1.2800/1.3000 previously)”.