Extra weakness in GBP/USD should meet a tough support level at 1.2275, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “After GBP dropped to 1.2353 on Monday, we noted yesterday that ‘despite the decline, downward momentum has not improved much’. However, we were of the view that ‘there is scope for GBP to dip below 1.2345 before stabilization is likely’. GBP did not dip below 1.2345 but instead, rebounded to a high of 1.2449. The rapid bounce appears to be overdone and GBP is unlikely to advance much further. Today, GBP is more likely to trade in a range, expected to be between 1.2385 and 1.2455.”

Next 1-3 weeks: “Two days ago (17 Apr, spot at 1.2405), we highlighted that GBP could edge lower but any decline is unlikely to break clearly below the major support at 1.2275. We continue to hold the same view even though after the rebound yesterday, the odds for GBP to decline have diminished. All in all, only a breach of 1.2475 (no change in ‘strong resistance’ level) would indicate that the downside bias has faded.”