GBP/USD could re-visit 1.2720 – UOB

Cable’s downside could open the door for a test of the 1.2720 area, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for ‘limited’ downside risk was proven wrong as GBP dropped sharply to hit a low of 1.2810. The weak daily closing suggests further downward pressure but the support at 1.2775 is a major level and is unlikely to yield so easily (next support is further down at 1.2720). Overall, only a move back up above 1.2880 would indicate that the current weakness has stabilized (minor resistance is at 1.2855)”.

Next 1-3 weeks: “Despite the perceived ‘diminished odds’ for further weakness, GBP lurched lower yesterday and edged below the July’s low of 1.2812 (overnight low of 1.2810). After languishing for several days, downward momentum has picked up again and the revised target of 1.2775 appears to be within reach. A clear break below this level would shift focus to 1.2720. On the upside, only a break of 1.2920 (stop-loss level adjusted lower from 1.2970) would indicate that the bearish phase that started on 07 Aug (spot at 1.3045) has ended”.