In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, GBP/USD could retreat further and break below the 1.2400 support in the near term.

Key Quotes

24-hour view: “Yesterday, we held the view that GBP ‘is under mild downward pressure’ and ‘could edge lower but a sustained drop below 1.2440 is unlikely’. In London trade, GBP dropped to 1.2422 but the decline was brief as it rebounded to end the day unchanged at 1.2487. The price movements are likely part of a consolidation phase and today, we expect GBP to trade in a range of 1.2440 and 1.2525.”

Next 1-3 weeks: “Our most recent narrative was from Monday (15 May, spot at 1.2455) wherein GBP is likely to weaken further to 1.2390 but oversold short-term conditions could slow the pace of any further decline. Yesterday (17 May), GBP dropped to 1.2422 and then rebounded. We continue to hold the same view. Only a breach of 1.2560 (no change in ‘strong resistance’ level) would indicate that 1.2390 is not coming into view.