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In opinion of FX Strategists at UOB Group, Cable could slip back to the mid-1.2200s in the next weeks.

Key Quotes

24-hour view: “Our view for GBP yesterday was “the decline in GBP has room to extend lower but 1.2310 is expected to offer solid support”. The subsequent weakness exceeded our expectation as GBP dropped to 1.2303 before recovering. The decline in GBP appears to have stabilized somewhat but it is too early to expect a sustained rebound. GBP is more likely to consolidate its loss and trade sideways to slightly lower. Expected range for today, 1.2290/1.2360″.

Next 1.3 weeks: “While our view from two days ago (24 Sep, spot at 1.2435) that GBP has made a “short-term top” was correct, we expected GBP to trade sideways to “slightly lower”. However, GBP plummeted yesterday (25 Sep) and already tested the bottom of our expected 1.2350/1.2550 sideway trading range (overnight low 1.2349). The price action suggests 1.2582 could be a more significant top than previously expected. In other words, instead of “slightly lower”, the pullback in GBP could extend lower to the next support at 1.2250. Resistance is at 1.2420 but only a move above 1.2450 (‘strong resistance’) would indicate that the current downward pressure has eased”.