GBP/USD could move lower and back to 1.3050 if 1.3100 level is broken on the short-term horizon, currency strategists at the UOB Group suggest.
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24 hour view: “Although we expected GBP/USD to ‘weaken further’ yesterday and were of the opinion that ‘any decline is expected to find solid support at the 2021 low of 1.3160’. The expected support failed to materialize as GBP/USD broke easily 1.3160 and tumbled to 1.3102 bearish momentum has eased somewhat but risk remains to the downside from here a break of 1.3100 would not be surprising but oversold conditions suggest GBP/USD may not be able to sustain momentum below that level. A support point below this major support is 1.3050. Resistance is at 1.3170, followed by 1.3200.”
Next 1-3 weeks: “We have highlighted GBP/USD downside risk for over a week now. In our latest narrative yesterday (March 7, GBP/USD at 1.3215), we highlighted that GBP/USD risk remains on the side Negative, but note there is important support at 1.3160 Adding that ‘Looking forward, the next support below 1.3160 is 1.3100’ In other words, while our view on a weaker GBP/USD was not wrong, we did not expect the subsequent sharp sell off that sent GBP/USD to a low of 1.3102 Downside momentum remains strong and a break of 1.3100 would shift focus to 1.3050 followed by 1.3000 Downside risk is always intact and when the GBP/USD does not move above 1.3280 in these few days (the ‘strong resistance level’ was at 1.3330 yesterday).
Source: Fx Street
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