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Cable is expected to weaken further in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “While our view for GBP to weaken yesterday was not wrong, we underestimated the downward momentum as GBP plunged to a low of 1.2711 (we were of the view that a sustained decline below 1.2763 is unlikely). From here, further GBP weakness is not ruled out but in view of the oversold conditions, the next support at 1.2650 is likely out of reach for now (1.2680 is a relatively strong support). Resistance is at 1.2780 followed by 1.2810.”

Next 1-3 weeks: “Yesterday (22 Sep, spot at 1.2820), we expected GBP ‘to trade with a downward bias towards 1.2730’ and we highlighted that GBP ‘has to close below this level before further weakness can be expected’. GBP subsequently dropped to 1.2711 before closing at 1.2734. While GBP did not close below 1.2730, downward momentum has improved considerably. In other words, GBP is likely to weaken further. The next support is at 1.2650. The current negative outlook for GBP is deemed as intact as long as it does not move above 1.2860 (‘strong resistance’ level was at 1.2930 yesterday).”