GBP/USD faces further weakness near term.

Further losses in GBP/USD in the next weeks remain on the cards, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.Key Quotes

24-hour view: “While we expected GBP to weaken last Friday, we held the view that ‘1.2120 is unlikely to come under threat’. However, GBP weakened more than expected as it plunged to a low of 1.2047. While clearly oversold, the decline has scope to dip to the support at 1.2000 before stabilization is likely. Today, the next support at 1.1950 is likely out of reach. Resistance is at 1.2100 but only a breach of 1.2150 would indicate that the weakness in GBP has stabilized.”

Next 1-3 weeks: “We turned negative on GBP last Thursday (03 Feb, spot at 1.2225) even though we indicated that any decline is likely to face solid support at 1.2120. The anticipated support did not materialize as GBP sliced through 1.2120 and plunged to a low of 1.2047. The further increase in downward momentum suggests more GBP weakness. The next significant support is at last month’s low of 1.1845. That said, it remains to be seen if GBP has enough momentum to drop to this level (there is a minor support at 1.1950). Overall, only a breach of 1.2200 (‘strong resistance’ level was at 1.2320 last Friday) would indicate that the current downward momentum has eased.”

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