GBP/USD: Bears are set to test 1.3145 – UOB Group

The Pound Sterling (GBP) could weaken but does not appear to have enough momentum to break the strong support at 1.3145. In the longer run, rapid slowdown in momentum suggests the likelihood of GBP rising to 1.3320 has diminished, UOB Group analysts Quek Ser Leang and Lee Sue Ann note.

GBP may test 1.3145 near term

24-HOUR VIEW: “We did not anticipate GBP to tumble yesterday, as it fell by 0.53% (1.3191). There has been an increase in momentum, but it does not appear to be enough for GBP to break the strong support at 1.3145 (there is another support at 1.3165). Resistance is at 1.3220; a breach of 1.3245 would indicate that GBP is not weakening further.”

1-3 WEEKS VIEW: “After GBP soared last Friday, we indicated on Monday (26 Aug, spot at 1.3215) that ‘the sharp and rapid rise is coupled with strong momentum.’ We expected GBP to continue to rise and indicated that ‘the next level to monitor is 1.3320.’ The sharp drop of 0.53% (1.3191) yesterday was surprising. While our ‘strong support’ level at 1.3145 has not been breached yet, the rapid slowdown in momentum suggests the likelihood of GBP rising to 1.3320 has diminished. GBP must break and remain above 1.3250 in the next 1 to 2 days, or a breach of the ‘strong support’ level would not be surprising.”