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Further downside in Cable could see the mid-1.2800s retested in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden lurch lower in GBP that cracked the strong support at 1.2940 came as a surprise (low of 1.2921). The rapid pick up in downward momentum suggests the risk for today remains on the downside. That said, 1.2900 is expected to offer solid support for today (next support at 1.2870). All in, GBP is likely to stay on the back foot unless it can move above 1.2980 (minor resistance is at 1.2950).”

Next 1-3 weeks: “While we indicated yesterday that GBP is likely to trade within a 1.2900/1.3200 range, we noted that ‘looking forward, the prospect for a breach of 1.2900 appears to be higher’. The sudden lurch lower in GBP and the subsequent weak daily closing in NY (1.2927, -0.53%) suggests that the risk of a break of 1.2900 has increased. The next support level of note below 1.2900 is at 1.2850. From here, GBP is expected to stay on the back foot unless it moves back above 1.3020.”