GBP/USD: The pair is set to break below 1.2600 – UOB Group

GBP could break below 1.2600. Downward momentum is picking up again, but the next major support at 1.2550 is unlikely to come into view for now, analysts at UOB Group note.

A break above 1.2630 may lead to 1.2650

24-HOUR VIEW: “The sharp selloff in GBP to a low of 1.2616 was surprising (we were expecting range trading). Strong downward momentum suggests GBP could break below the major support at 1.2600. However, oversold conditions suggest that the next major support at 1.2550 is unlikely to come into view for now. Resistance levels are at 1.2630 and 1.2650.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since early last week. After GBP dropped to 1.2622 and rebounded strongly, we indicated two days ago (25 Jun, spot at 1.2680) that ‘the slowdown in momentum suggests a slim chance of GBP weakening to 1.2600.’ However, we added, ‘only a breach of 1.2705 would indicate that the weakness in GBP has stabilized.’ Yesterday, GBP plummeted and dropped to 1.2616. Downward momentum is picking up again, and a break of 1.2600 would not be surprising. The next level to watch below 1.2600 is at 1.2550. On the upside, the ‘strong resistance’ level has moved lower to 1.2680 from 1.2705.”