In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the breach of the 1.2450 level is expected to mitigate the upside pressure in GBP/USD.

Key Quotes

24-hour view: Yesterday, we held the view that “there is room for GBP to edge higher”. GBP then eked out a fresh high of 1.2600 and then plummeted to end the day at 1.2512 (-0.54%). The rapid decline appears to be overdone and GBP is unlikely to weaken much further. Today, GBP is more likely to trade in a range of 1.2475/1.2575.

Next 1-3 weeks: After GBP soared at the end of last week, we highlighted on Friday (09 Jun, spot at 1.2555) that while GBP “is likely to rise further, it remains to be seen if it has enough momentum to revisit last month’s high near 1.2680”. Yesterday, GBP rose to 1.2600 and then dropped sharply to close lower by 0.54% (1.2512). Upward momentum is beginning to fade and a break below 1.2450 (no change in ‘strong support’ level) would indicate that 1.2680 is not coming into view.