GBP/USD: Door open for a move to 1.2166 – UOB

Cable does not rule out another test of the 1.2166 level, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP moved above the resistance we indicated at 1.2325 first (high of 1.2340) before dropping sharply to a low of 1.2210. While downward momentum has picked up, the rapid decline has moved into overbought territory and further GBP weakness appears unlikely for today. GBP is more likely to consolidate and trade between 1.2190 and 1.2290.”

Next 1-3 weeks: “We highlighted the pick-up in downward momentum on Tuesday (12 Apr, spot at 1.2315) and held the view that “a NY closing would 1.2240 would indicate the start of a sustained down-move”. GBP closed just a few pips below 1.2234 (NY close of 1.2234) yesterday. While we would prefer a weaker closing, the price action suggests that GBP could move towards last month’s low at 1.2166. Overall, GBP is expected to stay under pressure unless it can move above 1.2355 (‘strong resistance’ level previously at 1.2410). Meanwhile, oversold short-term conditions could lead to 1 to 2 days of consolidation first.”