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In opinion of FX Strategists at UOB Group, Cable is seen navigating within the 1.3500-1.3670 range in the next weeks.

Key Quotes

24-hour view: “Our expectation for GBP to move higher was wrong as it dropped sharply to 1.3572 before closing on a weak note at 1.3588 (-0.74%). Despite the sharp drop, downward momentum has not improved by as much. That said, it is too soon to expect a recovery. From here, barring a move above 1.3630 (minor resistance is at 1.3605), GBP is likely to weaken to 1.3540. The next support at 1.3500 is not expected to come into the picture for now.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (13 Jan, spot at 1.3670) where we held the view that GBP ‘is expected to trade with an upward bias but any advance is expected to face solid resistance at 1.3760’. However, GBP cracked our ‘strong support’ level at 1.3590 last Friday as it dropped to 1.3572. Upward momentum has fizzled out and the risk is beginning to shift to the downside. At this stage, any weakness is viewed as part of 1.3500/1.3670 range. Looking forward, a daily closing below 1.3500 would indicate the start of a deeper and more sustained pullback.”