Bears to break support at 1.2710 – UOB Group

The pound sterling (GBP) is expected to fall; given the slight downside pressure, any downside is unlikely to break the 1.2710 support and the chance of GBP falling below 1.2665 is low, note UOB Group FX analysts Quek Ser Leang and Peter Chia.

A sustained break below 1.2710 is unlikely

24-HOUR OUTLOOK: “Last Friday, GBP traded in a 1.2727/1.2773 range, closing largely unchanged (1.2756, +0.04%). Despite the quiet price action, there was a slight increase in downside momentum. Today, we expect the GBP to fall. Given the mild downward pressure, any downside is unlikely to break the support at 1.2710. On the upside, resistance levels are at 1.2780 and 1.2800.”

WEEKS 1-3: “We turned negative in GBP at the end of last month (see chart annotations below). After GBP fell to 1.2674, in our most recent narrative last Wednesday (07 Aug at 1.2690) we indicated that “rejuvenated momentum indicates risk remains to the downside and levels to watch are 1 .2645 and 1.2610”. GBP later fell to 1.2665 and then rebounded strongly, hitting a high of 1.2773 last Friday. Although our ‘strong resistance’ level at 1.2780 has not yet been breached, the downward momentum has weakened considerably and the chance of GBP falling below 1.2665 is low. To look at it another way, if GBP breaks above 1.2780 it would suggest that GBP has entered a consolidation phase.”