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Cable keeps the bearish view unchanged so far and there is still the likeliness of a drop below the 1.2000 level in the next weeks.

Key Quotes

24-hour view: “GBP staged a rally to 1.2250 overnight but gains were subsequently pared and most trades were still confined to our expected range of 1.2120 – 1.2220. Today, expect consolidation to still continue, albeit in an enlarged 1.2120 – 1.2250 range”.

Next 1-3 weeks: “”While we held the view yesterday (30 Jul, spot at 1.2225) that GBP has moved into a ‘negative phase’ and that it “could trade to 1.2110″, the subsequent rapid pace of decline was not exactly expected (GBP plunged to an overnight low of 1.2120). The downward acceleration over the past couple of days could be attributed to the lack of significant support levels. From here, if GBP were to crack 1.2110, it could lead to further steep decline as the next support is more than 100 pips lower at 1.1985. That said, 1.1985 is just a minor low in Jan 2017 (on the weekly chart) and it is left to be seen how much support it can offer (if GBP were to move to this level). Below this level, the more significant support would be the Oct 2016 ‘flash crash’ low of 1.1491. All in, despite being oversold, the current weakness in GBP is not showing sign of stabilizing just yet. Only a break of the 1.2295 ‘key resistance’ (level was at 1.2335 yesterday) would suggest that the decline in GBP is ready to take a breather.”