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FX Strategists at UOB Group noted that Cable could test lower levels in the next weeks.

Key Quotes

24-hour view: “We highlighted last Friday that GBP ‘could test 1.3100 before stabilizing’. We underestimated the downward pressure as GBP not only cracked 1.3100 but also the next support at 1.3070 (low of 1.3054). While the decline still appears to be running ahead of itself, the current weakness is not showing sigh of stabilizing just yet. From here, GBP could dip below 1.3054 but the next support at 1.3025 is unlikely to come into the picture (there is another strong support at 1.3000). Resistance is at 1.3120 followed by 1.3150.”

Next 1-3 weeks: “While the rapid retreat from last week’s 1.3284 peak is in line with our view from last Thursday (02 Jan, spot at 1.3250) wherein GBP is ‘trading sideways between 1.3000 and 1.3400’, the swift pace of decline has increased the risk of a break of the bottom of the expected range. 1.3000 is a relatively strong support level and a breach of this level would suggest the mid-December low of 1.2900 could come under threat. From here, GBP has to move and stay above 1.3190 or the current mild downward pressure would increase quickly.”