FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted the increasing likeliness of a breach of the 1.1800 in GBP/USD in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘is unlikely to weaken further’ and we expected GBP to ‘trade between 1.1825 and 1.1925’. GBP subsequently plummeted briefly to 1.1828, soared to 1.1968 before dropping back down to close at 1.1895 (+0.09%). Despite the choppy price actions, the underlying tone appears to be soft and we see chance for GBP to weaken but a break of the major support at 1.1800 appears unlikely for now (there is another support at 1.1825).  Resistance is at 1.1905 followed by 1.1940.”

Next 1-3 weeks: “There is no change in our view from yesterday (13 Jul, spot at 1.1880). As highlighted, while downward momentum has not improved by much, the chance for GBP to break 1.1800 has increased. A break of 1.1800 would shift the focus to 1.1750. The downside risk is intact as long as GBP does not move above 1.1980 (no change in ‘strong resistance’ level from yesterday).”