FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang talked down the possibility of a break below 1.1400 in GBP/USD in the near term.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘there is room for the rapid rise in GBP to extend to 1.1725 before easing’. While GBP subsequently rose to a high of 1.1738, it nose-dived and sliced through several strong support levels. The sharp sell-off appears to be overdone but GBP could drop to 1.1465 first before stabilizing. The major support at 1.1400 is not expected to come into the picture. Resistance is at 1.1545 followed by 1.1590.”

Next 1-3 weeks: “The advance in GBP that started two days ago came to an abrupt end as GBP plunged below our ‘strong support’ level at 1.1580. While the rapid drop suggests GBP is likely to stay under pressure, the chance for a break of the round number support at 1.1400 is not high. On the upside, a breach of 1.1630 (‘strong resistance’ level) would indicate that the current weakness in GBP has stabilized.”