In the opinion of FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann, GBP/USD could extend the drop to the 1.1630 region in the next few weeks.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but we were of the view ‘the major support at 1.1630 is likely out of reach’. Our view was not wrong as GBP dropped to 1.1650 before rebounding. The rebound amidst oversold conditions suggests GBP is unlikely to weaken further. For today, GBP is more likely to trade sideways, expected to be within a range of 1.1670/1.1760.”

Next 1-3 weeks: “Yesterday, we noted that downward momentum has improved quickly and GBP could weaken towards 1.1630. GBP subsequently dropped to 1.1650 before rebounding. There is no change in our view for now even though oversold shorter-term conditions could lead to a couple of days of consolidation first. Overall, only a break of 1.1800 (no change in ‘strong resistance’ level from yesterday) would indicate that GBP is unlikely to weaken further.”