Cable’s downside momentum could accelerate on a breakdown of the 1.3820 level in the near-term, according to UOB Group’s FX Strategists.
24-hour view: “We highlighted yesterday that ‘downward momentum has improved a tad and GBP could edge lower to 1.3890′ We added, ‘in view of the lackluster momentum, the odds for an extension to 1.3860 are not high’. Our view was not wrong as GBP dropped to an overnight low of 1.3881.From here, improved downward momentum could lead to GBP moving below 1.3860 but the next support at 1.3820 is likely out of reach. Resistance is at 1.3925 followed by 1.3965.”
Next 1-3 weeks: “Two days ago (03 Mar, spot at 1.3955), we indicated that ‘downward momentum has more or less dissipated and GBP could trade between 1.3860 and 1.4070 for now’. While there is no change in our view for now, shorter-term momentum is beginning to improve. That said, GBP has to close below 1.3820 before a sustained decline can be expected. The odds for such a move are not high for now but would remain intact unless GBP moves above 1.3965 within these few days.”