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Cable’s decline does not rule out a potential retracement to the 1.2845 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘any decline is unlikely to break last week’s low near 1.2880’. However, GBP cracked 1.2880 and plummeted to 1.2854 before snapping back up almost immediately. The underlying tone has firmed somewhat and this could lead to GBP trading within a higher range of 1.2880/1.2980 for today.”

Next 1-3 weeks: “Yesterday (02 Nov, spot at 1.2930), we highlighted that ‘downward momentum has improved further but still appears lackluster for now’. We added, ‘GBP is deemed to be under mild downward pressure and could gravitate towards the major support at 1.2845’. GBP subsequently plummeted to 1.2854 but the decline was short-lived. From here, there is no change in our view and we still see chance for GBP to test the 1.2845 level. Only a break of 1.3030 (no change in ‘strong resistance’ level) would indicate that the current mild downward pressure has eased. Looking forward, the next support below 1.2845 is at 1.2800.”