Any decline is part of a lower 1.2570/12640 range – UOB Group

Rapid drop in Pound Sterling (GBP) could extend vs US Dollar (USD); oversold conditions suggest any decline is part of a lower 1.2570/12640 range. In the longer run, two-week GBP strength has ended; for the time being, it is likely to trade between 1.2520 and 1.2670, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Two-week GBP strength has ended

24-HOUR VIEW: “Yesterday, we expected GBP to ‘trade between 1.2640 and 1.2700.’ GBP subsequently rose to 1.2689, and then in a sudden move during the NY session, plunged to 1.2598. While the rapid drop could extend, oversold conditions suggest any decline is likely part of a lower 1.2570/1.2640 range. In other words, GBP is unlikely to break clearly below 1.2570.”

1-3 WEEKS VIEW: “We revised our view to positive two weeks ago on 14 Feb, when GBP was at 1.2560. Tracking the advance, we indicated yesterday (27 Feb, spot at 1.2670) that ‘upward momentum has slowed further, and a breach of 1.2615 would indicate that GBP is not strengthening further.’ GBP then broke below 1.2615, indicating that GBP strength has ended. The current price movements are likely part of a range trading phase. For the time being, we expected to trade between 1.2520 and 1.2670.”