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Cable faces a potential drop to the mid-1.2400s in the near-term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday, ‘the rapid decline is severely oversold but there is room for the weakness in GBP to extend to 1.2510’. We added, ‘for today, the next support at 1.2450 is unlikely to come into the picture’. GBP subsequently dropped to 1.2473 before rebounding quickly. While downward momentum has waned somewhat, there is no indication that the current weakness has stabilized. From here, GBP could test the 1.2450 support first before a more sustained recovery can be expected (minor support is at 1.2475). Resistance is at 1.2545 followed by 1.2580.”

Next 1-3 weeks: “We continue to hold the same view from last Friday (12 Jun, spot at 1.2570) wherein GBP has likely made a short-term at 1.2812 last Wednesday (10 Jun). The current pullback is viewed as a corrective pull-back that has scope to extend to 1.2450, possibly as low as 1.2400. On the upside, if GBP moves back above 1.2650 (‘strong resistance’ level was at 1.2680 last Friday), it would indicate the corrective pull-back has run its course.”

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