GBP/USD: The major support at 1.3365 is unlikely to into view – UOB Group

As long as Pound Sterling (GBP) holds below 1.3480 against US Dollar (USD), it could test 1.3405; the major support at 1.3365 is unlikely to into view. In the longer run, GBP is likely to trade with a downward bias; it is unclear for now if it can reach the major support at 1.3365, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is likely to trade with a downward bias

24-HOUR VIEW: "GBP rose to a high of 1.3588 last Thursday before pulling back sharply. On Friday, when GBP was at 1.3515, we were of the view that 'the pullback could extend but is unlikely to threaten 1.3450.' Our directional call was not wrong, but GBP fell more than we expected, dropping to a low of 1.3417. While conditions are oversold, the decline has not stabilised. Today, as long as GBP holds below 1.3480 (with minor resistance at 1.3455), it could test 1.3400. The major support at 1.3365 is unlikely to come into view."

1-3 WEEKS VIEW: "We revised our view from positive to neutral last Friday (25 Jul, spot at 1.3515). We stated that 'upward momentum has largely faded' and we expect GBP to 'trade in a range of 1.3450/1.3590.' We did not expect GBP to break below 1.3450 and drop to a low of 1.3417. Downward momentum is starting to build, albeit tentatively. From here, we expect GBP to trade with a downward bias, but it is too early to determine if GBP can reach the major support at 1.3365 (there is another support level at 1.3405). To sustain the buildup in momentum, GBP must not break above the ‘strong resistance’ level, currently at 1.3510."