FX Strategists at UOB Group noted Cable remains under pressure and could test the 1.3040 area in the next weeks.
Key Quotes
24-hour view: “We expected a lower GBP yesterday but were of the view that the 1.3175 support would not be an easy level to break. However, GBP crashed through this strong support and plummeted to a low of 1.3106, just a few pips above last week’s 1.3102 low. From here, the 1.3100/05 level appears to be vulnerable and a break of this major support could lead to a drop to 1.3070 (next support is at 1.3040). On the upside, we expect 1.3190 to be strong enough to cap any intraday recovery (minor resistance is at 1.3155)”.
Next 1-3 weeks: “The clear break of the 1.3175 support yesterday was unexpected and the focus is clearly at 1.3100 now (this level was tested but held last week with a low of 1.3102). The weak daily closing yesterday indicates that the pressure has shifted to the downside but in view of the still oversold conditions, any weakness could be limited to the 1.3040. In order to maintain the current downward momentum, GBP should not move back above the ‘key resistance’ at 1.3235. In the shorter-term, 1.3190 is already a strong level”.
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