GBP/USD a test of 1.2100 stays on the cards – UOB

FX Strategists at UOB Group remain bearish on Cable and see a potential test of the 1.2100 handle in the next 1-3 weeks.

Key Quotes

“The 1.2150 target indicated yesterday was exceeded as GBP dropped to a low of 1.2139. Downward momentum is waning rapidly and the current movement is likely the early stages of a basing phase. That said, in view of the recent sharp drop, it is too early to expect a significant rebound. GBP is more likely to trade sideways at these lower levels even though the immediate bias is for a probe higher towards the top end of the expected consolidation range of 1.2145/1.2220”.

“We were of the view that GBP would grind lower towards 1.2150 followed by 1.2100. The overnight low has been 1.2139 and while there are some early and tentative signs that GBP is trying to form a base, only a move back above the trailing stop-loss at 1.2250 (adjusted from 1.2310) would indicate that a short-term low is in place. Until then, GBP is expected to grind lower towards the next support at 1.2100”.