Cable remains tilted to the downside, while a solid hurdle emerges at 1.3050, noted FX Strategists at UOB Group.
24-hour view: “Last Friday, we highlighted that GBP ‘could weaken further but odds for break of the major support at 1.2845 are not high’. GBP subsequently dropped to 1.2860, rebounded quickly and traded sideways for the rest of the sessions. Momentum indicators are beginning to trun flat and for today, GBP is likely to consolidate and trade between 1.2885 and 1.2980.”
Next 1-3 weeks: “We indicated yesterday (15 Oct, spot at 1.3015) that ‘the rapid swings have resulted in a mixed outlook’ and GBP ‘could trade between 1.2845 and 1.3120 for a period of time’. GBP subsequently gave up most of its gains from Wednesday (14 Oct) as it dropped to 1.2891 before closing on a weak note at 1.2899 (-0.85%). While the underlying tone has weakened, it is too soon to expect a sustained decline below 1.2845. Overall, GBP is likely to trade on a slightly defensive mode with 1.3050 acting as a strong resistance.”