GBP/USD: The pair is set to break below 1.2600 – UOB Group

The Pound Sterling (GBP) is likely to trade in a range of 1.2650/1.2700. Slowdown in momentum suggests a slim chance of GBP weakening to 1.2600.

A breach of 1.2705 to signal GBP is stabilised

24-HOUR VIEW: “On Monday, GBP rebounded to a high of 1.2698. Yesterday (Tuesday), we indicated that ‘the robust rebound appears to be overextended, and instead of rising further, GBP is more likely to trade in a range today, probably between 1.2650 and 1.2705.’ Our view of rangetrading was not wrong, even though GBP traded in a narrower range of 1.2670/1.2702. GBP closed largely unchanged at 1.2686 ( 0.01%). Further range-trading seems likely today, probably in a range of 1.2650/1.2700.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since early last week. After GBP rebounded two days ago, we highlighted yesterday (25 Jun, spot at 1.2680) that ‘the slowdown in momentum suggests a slim chance of GBP weakening to 1.2600.’ We continue to hold the same view. Overall, only a breach of 1.2705 (no change in ‘strong resistance’ level) would indicate that the weakness in GBP has stabilised.”