In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD still risks a deeper pullback in the short term.

Key Quotes

24-hour view: “Our expectations for GBP to ‘trade sideways’ yesterday was incorrect as it plummeted to a low of 1.1622 during NY session. While the rapid drop appears to be overdone, the weakness in GBP has not stabilized. In other words, GBP could weaken further but the chance for a break of 1.1610 is not high for now. The next support at 1.1580 is not expected to come under threat. Resistance is at 1.1688 but only a breach of 1.1715 would indicate that the weakness in GBP has stabilized.”

Next 1-3 weeks: “On Monday (29 Aug, spot at 1.1690), we noted that downward momentum has improved quickly and we held the view GBP could weaken towards 1.1630. Yesterday (30 Aug), GBP dropped to a low of 1.1622. Downward momentum has improved further, albeit not by much and the risk for GBP is still on the downside. The next level to watch is at 1.1580. On the upside, a break of 1.1755 (‘strong resistance’ level was at 1.1800 yesterday) would indicate that GBP is unlikely to weaken further.”