Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group note GBP/USD could weaken further and revisit 1.2390 in the next few weeks.

Key Quotes

24-hour view: “We expected GBP to trade sideways between 1.2475 and 1.2545 yesterday. GBP dropped briefly to a low of 1.2466 in London trade, rebounded to 1.2546 and then fell back down to end the day at 1.2487 (-0.36%). Today, the weakened underlying tone is likely to lead to GBP edging lower but a sustained drop below 1.2440 is unlikely. On the upside, a breach of 1.2530 (minor resistance is at 1.2505) indicates that the current mild downward pressure has faded.”

Next 1-3 weeks: “Our most recent narrative was from Monday (15 May, spot at 1.2455) wherein GBP is likely to weaken further to 1.2390 but oversold short-term conditions could slow the pace of any further decline. We continue to hold the same view. Only a breach of 1.2560 (no change in ‘strong resistance’ level) would indicate that 1.2390 is not coming into view.”