GBP/USD: Set to face significant support at 1.2100 – UOB Group
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The Pound Sterling (GBP) is likely to trade in a 1.2150/1.2275 range. In the longer run, deeply oversold conditions signal GBP could trade in a range for a couple of days; any decline is expected to face significant support at 1.2100, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
GBP can trade in a range for a couple of days
24-HOUR VIEW: "GBP dropped to a low of 1.2100 on Monday and then rebounded sharply. Yesterday (Tuesday), when GBP was at 1.2230, we pointed out that 'the rebound in deeply oversold conditions indicates that GBP is unlikely to weaken today' We expected it to 'trade in a 1.2160/1.2270 range.' Our view of range trading was not wrong, even though GBP traded in a lower range of 1.2140/1.2251, closing modestly higher at 1.2217 (+0.11%). There has been no increase in either downward or upward momentum, and we continue to expect range trading today, most likely in a range of 1.2150/1.2275."
1-3 WEEKS VIEW: "We continue to hold the same view as yesterday (14 Jan, spot at 1.2230). As highlighted, deeply oversold conditions signal GBP could trade in a range for a couple of days. However, a breach of 1.2300 (no change in ‘strong resistance’ level from yesterday) would mean that the weakness in GBP that started late last week (as annotated in the chart below) has stabilised. Looking ahead, any further decline is expected to face significant support at the low of 1.2100."
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