The recent steep decline in the Pound Sterling seems a bit overdone, and it’s likely that the currency will stabilize within the 1.2650 to 1.2725 range. However, in the longer term, there’s a slight tilt towards a bearish outlook for the GBP. UOB Group’s foreign exchange specialists, Quek Ser Leang and Lee Sue Ann, suggest that any downward movement will likely encounter strong support at the 1.2610 mark.
GBP’s Downtrend Potential
24-Hour Snapshot: Yesterday, we anticipated GBP would hover between 1.2720 and 1.2785. Instead, it briefly climbed just above our expected ceiling, hitting 1.2787, only to take a sharp dive, bottoming out at 1.2668. It ended the day 0.61% down at 1.2673. This abrupt dip seems overdone, indicating the GBP might not weaken much further today. Instead, it is poised to consolidate, likely moving between 1.2650 and 1.2725.
1-3 Weeks Outlook: Early this week, we maintained a positive stance on the GBP. On Wednesday (11th December, with the spot rate at 1.2775), we noted the waning upward momentum, stating that GBP needed to break and hold above 1.2810 soon; otherwise, the chance of reaching 1.2850 would fade quickly. Then, on Thursday, the GBP plunged below our key support level of 1.2700. The momentum has shifted downward with a slight increase in bearish momentum, suggesting a bearish tilt for the GBP. Nonetheless, any decrease should face strong support near 1.2610. The bearish inclination is expected to stay unless the GBP surpasses the current strong resistance level of 1.2755.
