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In opinion of FX Strategists at UOB Group, Cable could still grind lower and faces the next support of note at 1.3750.

Key Quotes

24-hour view: “Our expectation for GBP to ‘consolidate’ last Friday was wrong as the clear break of 1.3900 led to a sharp plunge to 1.3791. Deeply oversold conditions coupled with the relatively firm price actions in early Asian hours indicate that further sustained weakness in GBP is unlikely. GBP is more likely to trade between 1.3780 and 1.3870.”

Next 1-3 weeks: “We have held a negative view in GBP since early last week. Last Friday, we indicated that ‘oversold short-term conditions could lead to 1 to 2 days of consolidation first’. Instead of consolidating, GBP plunged to 1.3791 during NY hours. The rapid and sharp drop appears to be running ahead of itself and while there is room for GBP to weaken to 1.3750, this level may not come into the picture so soon. Overall, the downside risk in GBP remains intact unless it can move above 1.3920 (‘strong resistance’ level was at 1.4010 last Friday).”