GBP/USD: Risk is still tilted to the downside – UOB Group

Price action remains soft, and the risk is still tilted to the downside; the major support is probably out of reach for now. In the longer run, GBP is now neutral; it is likely to trade in a range between 1.3415 and 1.3585, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Likely to trade in a range between 1.3415 and 1.3585

24-HOUR VIEW: "Two days ago, we were of the view that GBP 'could drop below the strong support at 1.3485.' After GBP dropped to a low of 1.3479, we indicated yesterday, when GBP was at 1.3490, that 'downward momentum continues to increase, and today, there is a chance for GBP to drop to 1.3460.' We added that GBP 'does not appear to have enough momentum to reach 1.3415.' Our assessments turned out to be correct, as GBP dropped to a low of 1.3448, then closed at 1.3459 (-0.24%). While the decline did not lead to a further acceleration in downward momentum, the price action remains soft, and the risk is still tilted to the downside. However, the major support at 1.3415 is probably still out of reach for now. Resistance is at 1.3480; a breach of 1.3505 would indicate that GBP is not declining further."

1-3 WEEKS VIEW: "Our most recent narrative was from two days ago (19 Aug, spot at 1.3505), in which we highlighted that GBP 'is neutral now, and it is likely to trade in a range between 1.3415 and 1.3585.' Although GBP has been edging lower over the past couple of the days, the increase in momentum is not sufficient to indicate a sustained decline just yet. In other words, our view remains unchanged for now."