In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further downside in GBP/USD should meet a tough support near around 1.1730.

Key Quotes

24-hour view: “The sharp and rapid drop in GBP last Friday is deeply oversold. While further GBP weakness is not ruled out, the downside risk appears to be limited, at least for today. To look at it another way, GBP could drop further but a sustained decline below July’s low near 1.1760 appears unlikely for now (next support is at 1.1730). Resistance is at 1.1850 followed by 1.1885.”

Next 1-3 weeks: “The sharp drop in GBP last week has gathered considerable momentum and further GBP weakness appears likely. While conditions are oversold, a break of the year-to-date low near 1.1760 would not be surprising. In view of the oversold conditions, the pace of any further decline is likely to be at a slower pace and 1.1730 is expected to offer solid support. Resistance is at 1.1885 but only a break of 1.1935 would indicate that the current GBP weakness has stabilized.”