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FX Strategists at UOB Group keep the bearish outlook on Cable and do not rule out further decline.

Key Quotes

24-hour view: “Expectation for sideway trading yesterday was wrong as GBP reversed an initial bounce to a high of 1.2827 and plummeted to a low of 1.2704. The low is not far from the next major support at 1.2675 and while a dip below this level would not be surprising, a clear break of the next support at 1.2645 seems unlikely for now. Only a break back above 1.2780 would indicate that the current weakness has stabilized (minor resistance is at 1.2745). The 1.2827 high is not expected to come into the picture”.

Next 1-3 weeks: “The bearish phase that started late last week is still clearly intact as GBP eked out a fresh low of 1.2704 yesterday. As highlighted on Monday (13 Aug, spot at 1.2760), while the current decline in GBP is oversold, further GBP weakness is still likely. The low of 1.2704 was not far from the next ‘target’ of 1.2675 and a break of 1.2675 would shift the focus to 1.2590. All in, we continue to hold a bearish view until the ‘stop-loss’ level at 1.2840 is taken out (level was previously at 1.2880)”.