GBP/USD: Set to edge lower to 1.2675 before stabilising - UOB Group

Pound Sterling (GBP) could edge lower to 1.2675 before stabilisation is likely vs US Dollar (USD); any further decline is unlikely to reach 1.2580. In the longer run, GBP could decline further; it is unclear if it can reach the next major support at 1.2580, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP could decline further

24-HOUR VIEW: "GBP dropped sharply for the second day in a row yesterday, closing lower by 1.41% at 1.2724. The sharp decline over the past couple of days is deeply oversold. However, GBP could edge lower to 1.2675 before stabilisation is likely. Any further decline is unlikely to reach the next major support at 1.2580. Resistance is at 1.2820; a breach of 1.2870 would indicate that the current downward pressure has eased."

1-3 WEEKS VIEW: "After rising to 1.3207 last Thursday, GBP staged a dramatic decline, plunging by 2.87% over the past two days, marking its biggest 2-day drop since Sep 2022. While the swift and sharp decline appears excessive, there is no sign of stabilisation just yet. From here, as long as GBP holds below 1.3000, GBP could decline further. However, it is unclear if it can reach the next major support at 1.2580."