Downward momentum is building. The Pound Sterling (GBP) is likely to trade with a downward bias towards 1.2780, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

Bears are likely to test 1.2780 in short term

24-HOUR VIEW: “Last Thursday, GBP fell to a low of 1.2850. On Friday, we indicated that ‘further GBP weakness seems likely.’ We added, ‘to keep the momentum going, GBP must stay below 1.2895 with minor resistance at 1.2875. Instead of weakening further, GBP traded in a quiet manner between 1.2850 and 1.2878 before settling at 1.2866 (+0.12%). The price action appears to be part of a consolidation phase. Today, we expect GBP to trade between 1.2850 and 1.2895.”

1-3 WEEKS VIEW: “We indicated last Friday (26 Jul, spot at 1.2855) that ‘downward momentum is building, but at this time, it is premature to expect a significant decline.’ We added, ‘Overall, provided that the ‘strong resistance’ (level currently at 1.2920) is not breached, GBP is expected to trade with a downward bias towards 1.2780.’ Our view remains unchanged for now.”