UOB’s Quek Ser Leang and Lee Sue Ann report that GBP/USD has turned lower after failing to sustain gains above 1.3470. Short‑term momentum is now skewed to the downside, with scope for a test of 1.3405 and rising risk of a break below 1.3390 if the pair stays under 1.3470. Longer term, a weekly close below 1.3300 could target 1.2945/1.3010.

Sterling downside risks intensify

"24-HOUR VIEW: When GBP was at 1.3460 yesterday, we noted yesterday that “there has been a tentative increase in downward momentum,” and we expected GBP “to edge down to 1.3430.” We pointed out that “the next support at 1.3405 is likely out of reach.” Our assessments turned out to be correct, as GBP rose to 1.3470 and then dropped to a low of 1.3412. Downward momentum has increased but given the relatively rapid decline, conditions are oversold. That said, there is a chance for GBP to test 1.3405 today. The next support at 1.3390 is unlikely to come under threat. Resistance is at 1.3445, followed by 1.3460."

"1-3 WEEKS VIEW: On Tuesday (02 Jun, spot at 1.3460), we highlighted that “the current price movements are likely part of a range-trading phase between 1.3390 and 1.3510.” Yesterday, GBP dropped to a low of 1.3412. Downward momentum is increasing but currently, it is not sufficient to indicate a sustained decline. However, as long as GBP holds below 1.3470 (‘strong resistance’ level), the risk of GBP breaking below 1.3390 will increase over the next few days."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)