The British Pound (GBP) is expected to move lower; given the mild bearish pressure, any decline is unlikely to break the support at 1.2710, and the probability of the 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 VIEW: “Last Friday, GBP traded in a range of 1.2727/1.2773, closing virtually unchanged (1.2756, +0.04%). Despite the quiet price action, there has been a slight increase in bearish momentum. Today, we expect GBP to move lower. Given the mild bearish pressure, any decline is unlikely to break the support at 1.2710. On the upside, resistance levels are found at 1.2780 and 1.2800.”
1-3 WEEK VIEW: “We turned negative on GBP late last month (see chart annotations below). After GBP fell to 1.2674, in our most recent narrative last Wednesday (August 7 at 1.2690), we noted that ‘rejuvenated momentum indicates that risk remains to the downside, with levels to watch being 1.2645 and 1.2610.’ The GBP subsequently fell to 1.2665 and then rebounded strongly, reaching a high of 1.2773 last Friday. Although our ‘strong resistance’ level at 1.2780 has not yet been breached, the bearish momentum has waned considerably, and the probability of the GBP falling below 1.2665 is low. Put another way, if the GBP breaks above 1.2780, it would suggest that the GBP has entered a consolidation phase.
Source: Fx Street
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