GBP/USD downside appears limited – UOB

FX strategists at UOB Group noted the strong support facing Cable around the 1.2200 handle in the short term.

Key Quotes

“The 1.2240 target indicated yesterday was exceeded as GBP extended its decline to test the major 1.2200 support (exact low of 1.2200). Despite the subsequent rebound, the undertone still appears weak and as long as 1.2280/85 is intact, another attempt to move below 1.2200 seems likely (next support is at 1.2150)”.

“The outlook for GBP is still bearish but 1.2200 is a major support and this level has to crack before a move towards the next target at 1.2150 can be expected. On the upside, only a move back above 1.2340 (adjusted lower from 1.2400) would indicate that a temporary low is in place. The next support below 1.2150 is near the October’s low of 1.2080/85”.