Ella 
24-hour view: After GBP/USD fell sharply to 1.2680 on Wednesday, we highlighted yesterday: “Although heavily oversold, there seems to be enough momentum for GBP/USD to break below 1.2680.” We added: “1.2645 may not be reached today This major support level.” However, GBP/USD plunged to 1.2620 during the London session before recovering in the NY session to close roughly flat (1.2709, -0.09%). GBP/USD’s decline has slowed down, which, combined with remaining overbought, suggests that further weakness in GBP/USD is unlikely. GBP/USD is more likely to trade sideways between 1.2670/1.2770 today.
Next 1-3 weeks outlook: We turned bearish on GBP/USD last Friday (July 28, when prices were at 1.2800). In yesterday’s update (August 3rd, when the price was 1.2725), we believed that GBP/USD “is likely to weaken further”, noting that “the next target price is 1.2640, then 1.2580”. GBP/USD fell below 1.2640 during the London session (low was 1.2620). GBP/USD could still drop to 1.2580, although momentum has eased after rebounding off the lows. Overall, only a break of 1.2805 (“strong resistance” at 1.2830) would suggest that downside risks have diminished.
