The selling bias in GBP/USD is expected to lose traction beyond 1.2475, note Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: “Yesterday, we were of the view that ‘severely oversold decline in GBP could extend but a break of 1.2345 is unlikely’. In line with our expectations, GBP did not break 1.2345 as it dropped to 1.2353 before rebounding slightly to close at 1.2378 (-0.29%). Despite the decline, downward momentum has not improved much. That said, there is scope for GBP to dip below 1.2345 before stabilization is likely. Today, the major support at 1.2275 is not expected to come under threat. The downside risk is intact as long as GBP stays below 1.2425 (minor resistance is at 1.2400).”

Next 1-3 weeks: “We continue to hold the same view as yesterday (17 Apr, spot at 1.2405) wherein GBP could edge lower but any decline is unlikely to break clearly below the major support at 1.2275. Overall, only a breach of 1.2475 (strong resistance level was at 1.2510 yesterday) would indicate that the downside bias has faded.”