June 30, 2022 - 12:50 PM 253 views
According to UOB Group FX Strategists Lee Sue Ann and Quek Ser Leang, the GBP/USD exchange rate may now continue to decline and retest the 1.2040 area in the coming weeks.
24-Hour View: We stated in a previous article that "the sharp slide in the pound appears to have room to breach the major support at 1.2165. Oversold conditions imply that the next support at 1.2120 is unlikely to enter the picture, we continued. Although the degree of the collapse exceeded our predictions as the GBP fell swiftly to 1.2106, our prediction of a weaker pound was correct. Although the pound could lose more ground, the next support level at 1.2040 is now out of reach and the market is still oversold.
In the Next 1-3 Weeks: "We mentioned the recent consolidation period yesterday (29 June, spot at 1.2185). We emphasized that any decline from here could be temporarily contained to 1.2120 and that downward momentum is only just starting to build. Although our prediction of a weaker pound was accurate, the rate of decline—which saw the pound fall to a low of 1.2106—was quicker than we had anticipated. The GBP could continue to fall till it reaches the next support at 1.2040 as the downward momentum has significantly increased. A breach of the "strong resistance" at 1.2205 (the level was at 1.2285 yesterday) would signal an easing of the current downward pressure on the upswing.
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