GBP/USD: Major support at 1.3070 may not come into view so soon – UOB Group

Pound Sterling (GBP) could retest the 1.3140 level vs the US Dollar (USD) before a more sustained recovery can be expected. In the longer run, GBP is expected to weaken, but the major support at 1.3070 may not come into view so soon, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is expected to weaken

24-HOUR VIEW: "After plunging to a low of 1.3140 in the early London session yesterday, GBP recovered and traded sideways before closing at 1.3177, down by 1.07% for the day. Downward momentum has slowed, albeit tentatively. However, provided that 1.3235 (minor resistance is at 1.3200) is not breached, GBP could retest the 1.3140 level before a more sustained recovery can be expected. A break below 1.3140 is not ruled out, but currently, GBP does not seem to have enough momentum to reach the major support at 1.3070."

1-3 WEEKS VIEW: "In our most recent narrative from last Friday (09 May, spot at 1.3240), we indicated that 'while there has been no significant increase in downward momentum, there is scope for GBP to weaken to 1.3150.' We added, 'Currently, it is unclear whether GBP can break clearly below this level.' Yesterday, Monday, GBP fell below 1.3150, reaching a low of 1.3140. Downward momentum has increased, though not significantly. We continue to expect a lower GBP, but the major support at 1.3070 may not come into view so soon. To sustain the momentum, GBP must remain below the ‘strong resistance’ level at 1.3275 (level previously at 1.3330)."