UOB Research discusses GBP/USD outlook and adopts a tactical bearish bias, expecting a move lower towards 1.2140.
"The sudden lurch lower and the ease by which GBP cracked the 01 Oct low of 1.2205 came a surprise (overnight low of 1.2195). The price action indicates that the sideway-trading phase that started last Friday (04 Oct, spot at 1.2335) ended sooner than expected,"UOB notes.
"From here, GBP is expected to trade with a downward bias towards 1.2140. At this stage, it is too early to expect a sustained decline below this level (momentum is not as strong as preferred).
All in, GBP is expected to stay under pressure unless it can move above the ‘strong resistance’ level of 1.2300," UOB adds.