In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD could accelerate losses on a breach of the 1.2000 support in the short term.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘the major support at 1.2050 is not expected to come under threat’. GBP subsequently weakened more than expected as it dropped to 1.2051 before closing at 1.2053 (-0.68%). Despite the decline, downward momentum has not improved by all that much. That said, the risk is still on the downside but a clear break of the next major support at 1.2000 is unlikely. Resistance is at 1.2080 followed by 1.2110.”

Next 1-3 weeks: “We noted yesterday (15 Aug, spot at 1.2135) that upward momentum has dissipated and we expected GBP to trade within a range of 1.2050/1.2245. We did not expect the rapid manner by which GBP approaches the bottom of the expected range (low of 1.2051 in NY). Downward momentum is beginning to build but GBP has to break the major support at 1.2000 before a sustained weakness is likely. On the upside, a breach of 1.2150 would indicate that the build-up in downward momentum has dissipated. Looking ahead, the next support below 1.2000 is at 1.1920.”