GBP/USD could still slip back to the 1.1845 level while below 1.2150 in the near term, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “We expected GBP to consolidate and trade between 1.2000 and 1.2110 yesterday. In line with our expectations, GBP consolidated, albeit within a narrower range than expected (1.2037/1.2109). Most momentum indicators are flat and further consolidation appears likely. Expected range for today, 1.2025/1.2115.”

Next 1-3 weeks: “Our most recent narrative from Monday (February 6th, spot at 1.2050), stated, ‘further increase in downward momentum suggests more GBP weakness, but it remains to be seen if the significant support at 1.1845 will come into view’. GBP subsequently dropped to 1.1962 but it has not been able to make further headway on the downside. From here, as long as 1.2150 (no change in ‘strong resistance’ level) is not breached, there is still a chance, albeit a small one, for GBP to drop to 1.1845. A breach of 1.2150 would indicate that the weakness in GBP that started late last week has run its course.”