The likelihood of further weakness in GBP/USD now appears mitigated according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: GBP traded between 1.2714 and 1.2789 yesterday, narrower than our expected range of 1.2700/1.2800. The underlying tone has improved somewhat, and GBP is likely to edge higher. In view of the mild upward pressure, any advance is unlikely to threaten the major resistance at 1.2830 (minor resistance is at 1.2800). Support is at 1.2755, followed by 1.2725. 

Next 1-3 weeks: We have held a negative GBP view for more than a week now (see annotations in the chart below). In our latest narrative from last Friday (04 Aug, spot at 1.2715), we noted that “downward momentum has eased somewhat.” However, we indicated that “there is a chance for GBP to drop further to 1.2580.” Downward momentum has eased further, and the chance for GBP to drop to 1.2580 has diminished. However, only a breach of 1.2830 (no change in ‘strong resistance’ level) would indicate that the GBP weakness has stabilized.