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Cable’s ongoing leg lower could extend to the mid-1.3800s, according to UOB Group’s FX Strategists.

Key Quotes

24-hour view: We expected GBP to weaken last Friday but we were of the view that ‘the support at 1.3900 is unlikely to come into the picture’. However, GBP dropped to 1.3890 before rebounding quickly. Downward momentum has waned and this coupled with oversold conditions suggests further GBP weakness is unlikely. GBP is more likely to consolidate and trade within a 1.3920/1.4030 range.”

Next 1-3 weeks: “There is not much to add to our update from last Friday (26 Feb, spot at 1.3975). As highlighted, the recent positive phase in GBP has come to an end. The current movement is viewed as the early stages of a corrective pullback. Any pullback is likely limited to a test of 1.3850 for now. On the upside, a break of 1.4110 (no change in ‘strong resistance’ level) would indicate the downside risk has dissipated.”

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