FX Strategists at UOB Group, remain neutral on Cable, adding that there is still scope for extra downside.
Key Quotes
24-hour view: “We highlighted yesterday that there is “scope for GBP to test the 1.2865 support first before stabilization can be expected”. The anticipated decline went lower than expected as GBP hit an overnight low of 1.2855. There is no sign of stabilization just yet as GBP closed on a weak note in NY (1.2872). That said, downward momentum has slowed and while a move below the overnight low would not be surprising, we do not expect the next support at 1.2800 to come into the picture (1.2830 is already a relatively strong support). Resistance is at 1.2895 but stabilization is only upon a move back above 1.2925″.
Next 1-3 weeks: “We indicated yesterday that last week’s high of 1.3043 is likely a short-term top and expected GBP to trade sideways to ‘slightly lower’. That said, the relatively large drop of -0.68% by end of NY (close of 1.2872) was not exactly expected. For now, we continue to hold the same view but it appears that GBP could trade at a lower range than the 1.2800/1.3010 currently expected”.
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