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Cable stays under pressure and could grind lower to the 1.2840 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “After trading in a relatively quiet manner for a couple of days, the sudden lurch lower in GBP came as a surprise. The rapid pick-up in momentum suggests the weakness in GBP could be aiming for the month-to-date low of 1.2873. A breach of this level would not be surprising but oversold conditions indicate that the next support at 1.2840 is unlikely to come into the picture. On the upside, 1.2970 is expected to be strong enough to cap any intraday recovery (minor resistance is at 1.2945).”

Next 1-3 weeks: “Our expectation from last Friday (14 Feb, spot at 1.3045) for the ‘short-term strength to extend to 1.3160’ was proven wrong as GBP cracked the 1.2950 ‘strong support level’ (overnight low of 1.2908). While the immediate risk has shifted the downside, lackluster momentum suggests any decline in GBP would be slow-going. For the next one week or so, GBP could edge lower towards 1.2840 but unless there is a rapid increase in momentum, the next support at 1.2800 is likely out of reach. On the upside, a move above 1.3020 would indicate that the current mild downward pressure has eased.”