In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, GBP/USD could extend the decline to the 1.1900 region in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘as long as 1.2100 is not breached, GBP could continue to decline’. However, we were of the view that ‘a break of the major support at 1.1960 is unlikely today’. Our view turned out to be correct as GBP rose to 1.2075 in early London trade before dropping to a low of 1.1966. Downward has improved a tad and GBP is likely to break below 1.1960 today. As downward momentum is not strong for now, any decline is unlikely to threaten 1.1900. Overall, only a breach of 1.2045 (minor resistance is at 1.2010) would indicate that the downward pressure has eased.”

Next 1-3 weeks: “Yesterday (16 Feb, spot at 1.2040), we highlighted that ‘the risk for GBP has shifted to the downside’ but we held the view that ‘any decline is expected to face solid support at 1.1960’. GBP subsequently dropped to a low of 1.1966 in NY trade before settling at 1.1987 (-0.42%). Downward momentum has improved, albeit not much. In view of the increased downward momentum, a break of 1.1960 would not be surprising. The next support is at 1.1900. On the upside, a breach of 1.2100 (‘strong resistance’ level was at 1.2150 yesterday) would indicate that the downside risk has faded.”