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FX Strategists at UOB Group noted the odds of Cable breaking below the 1.2660 region remain well in place.

Key Quotes

24-hour view: “The sharp and rapid drop in GBP yesterday was clearly unexpected as it took out a couple of strong support levels with ease and crashed to a low of 1.2697. There is no sign the decline is stabilizing and further weakness GBP is not ruled out. That said, the rapid down-move appears to be running ahead of itself and the year-to-date low at 1.2662 is likely out of reach for now (minor support is at 1.2680). On the upside, only a break above 1.2780 would indicate that the current weakness has stabilized (minor resistance is at 1.2745)”.

Next 1-3 weeks: “After trading in a relatively quiet manner for a couple of days, GBP staged a sudden and sharp decline that easily cracked the 1.2750 support (in reaction to S&P dire warnings in the event of a no-deal Brexit). While we have held a ‘negative’ view on GBP for more than a week, we previously apportioned low odds for a sustained break of 1.2750. After yesterday’s price action, the focus has shifted to the year-to-date low at 1.2662. In view of the resurgence in downward momentum, the odds for a break of this level are more than even. All in, GBP is expected to stay under pressure until the ‘key resistance’ at 1.2820 is taken out (level was at 1.2890 yesterday). Looking ahead, a clear break of 1.2660 would suggest GBP has entered a bearish phase and could extend its weakness to 1.2590, possibly 1.2500″.