FX Strategists at UOB Group noted Cable faces the likeliness of a breakdown of the 1.2800 milestone in the next weeks.
Key Quotes
24-hour view: “We underestimated the impulsiveness of the decline in GBP as it easily exceeded the 1.2880 ‘target’ indicated yesterday (low of 1.2827). The decline appears to be severely over-extended and while a dip below the overnight low of 1.2827 would not be surprising, a sustained decline below 1.2800 seems unlikely. Resistance is at 1.2890 followed by 1.2935″.
Next 1-3 weeks: “We highlighted yesterday (12 Nov, spot at 1.2935) last week’s “1.3176 high is deemed as a short-term top and we do not expect GBP to move above this level for the next couple of weeks”. While we were of the view that the “near-term bias is tilted to the downside”, we did not anticipate the bottom of the expected 1.2800/1.3080 consolidation range to come within sight so soon (GBP hit an overnight low of 1.2827). For now, we continue to hold the view that GBP is trading within the range mentioned above even though the risk of a break of 1.2800 has increased. Looking forward, a break of 1.2800 would suggest GBP is ready to tackle the late October low of 1.2697″.
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