Cable looks weak and could slip back to the 1.2270 zone in the next weeks, in opinion of FX Strategists at UOB Group.
Key Quotes
24-hour view: “While our view for GBP to weaken last Friday was correct, our expectation for GBP to ‘edge lower towards 1.2370’ was not. GBP cracked 1.2370 and plunged to a low of 1.2314 before ending the day on a weak note at 1.2338 (-0.69%). The rapid drop appears to be running ahead of itself but at this stage, there is no sign of stabilization just yet. From here, GBP could weaken further but the major support at 1.2270 is likely out of reach for today (1.2300 is a relatively strong support). Overall, GBP is deemed to be under pressure unless it can move above 1.2400 (minor resistance is at 1.2360).”
Next 1-3 weeks: “Last Thursday (25 Jun, spot at 1.2420), we highlighted that GBP ‘is still likely in a range’ but cautioned that ‘1.2370 is beginning to look vulnerable’. GBP cracked 1.2370 during NY session on Friday and plummeted quickly to a low of 1.2314. Downward momentum has improved and GBP could weaken to 1.2270 from here. For now, the prospect for a move to 1.2220 is not high. On the upside, the ‘strong resistance’ level has moved lower to 1.2450 from 1.2520 previously. On a shorter-term note, 1.2400 is already quite a strong level.”
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