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In view of FX Strategists at UOB Group, Cable still faces the likeliness of extra pullbacks in the short-term horizon.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but held the view that “a sustained decline below the 1.2015 year-to-date low appears unlikely for today”. GBP subsequently plummeted to 1.1959 before rebounding strongly to end the day slightly higher at 1.2084 (+0.15%). The sharp recovery has scope to extend higher but at this stage, any advance is expected to face strong resistance at 1.2130, ahead of the key resistance at 1.2170. Support is at 1.2050 followed by 1.2010. The 1.1959 low is unlikely to come into the picture, at least not for today”.

Next 1-3 weeks: “While we indicated yesterday (03 Sep, spot at 1.2065) that “GBP could extend its decline to 1.1985″, we held the view the level “may not come into the picture so soon”. In that context, the swift but brief drop to 1.1959 and the subsequent strong rebound came as a surprise. Downward momentum has eased but GBP is not out of the woods just yet. Only a move above 1.2170 (no change in ‘key resistance’ level) would indicate that 1.1959 is the extent of the current weakness in GBP. Until then, the near-term risk is still on the downside but GBP has to move below 1.1959 within these several days or the prospect for further weakness in GBP would diminish quickly. The next support below 1.1959 is at 1.1900″.