GBP/USD further pullbacks likely – UOB

Cable could extend the drop to the 1.2280 area, suggested FX Strategists at UOB Group.

Key Quotes

“Expectation for range trading was wrong as GBP dropped sharply to a low of 1.2365 last Friday. While oversold, there is no sign of stabilization just yet and further extension to 1.2330/35 would not be surprising. Stabilization is only upon a move back above 1.2430 (minor resistance at 1.2400)”.

“Now that GBP is sitting just above the bottom of the previously expected 1.2350/1.2580 consolidation range, the question is whether we can see a sustained move below 1.2350. Based on the current momentum, the short answer is ‘yes’ even though any weakness is expected to encounter solid support near 1.2285. Only a move back above 1.2460 would indicate that the immediate downward pressure has eased”.