In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, GBP/USD risks further retracements in the short term.

Key Quotes

24-hour view: “The sharp drop in GBP to 1.1990 yesterday came as a surprise (we were expecting GBP to range trade). Not surprisingly, the sharp and rapid drop is oversold. However, as long as 1.2100 (minor resistance is at 1.2065) is not breached, GBP could continue to decline. That said, a break of the major support at 1.1960 is unlikely today.”

Next 1-3 weeks: “Our latest narrative was from two days ago (14 Feb, spot at 1.2140) where GBP is likely to consolidate and trade between 1.2040 and 1.2260. In NY trade, GBP cracked 1.2040 and plunged to a low of 1.1990. The rapid increase in downward momentum suggests the risk for GBP has shifted to the downside. However, any decline is expected to face solid support at 1.1960. On the upside, a breach of 1.2150 (‘strong resistance’ level) would indicate that the downside risk has abated.”