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FX Strategists at UOB Group still see Cable extending the consolidative theme in the next weeks.

Key Quotes

24-hour view: “Expectation for GBP to trade sideways was wrong as it surrendered most of the gains made earlier this week. The sharp and rapid drop to an overnight low of 1.3074 and the subsequent weak daily closing (NY close of 1.3078) indicates there is room for GBP to extend its weakness. Barring a break above 1.3125 (minor resistance at 1.3100), we expect GBP to extend its decline even though last week’s 1.3040 low is expected to offer solid support (there is another strong level near 1.3020)”.

Next 1-3 weeks: “We highlighted yesterday (27 Sep, spot at 1.3175), “despite the rather sharp rebound from last Friday’s 1.3041 low, we continue to view the current price action as part of a consolidation phase”. The rapid retreat from Wednesday’s (26 Sep) peak of 1.3218 reinforces our current view that GBP is trading within a broad 1.3020/1.3220 consolidation range. From here, the immediate bias is for GBP to test the bottom of the expected range at 1.3020. After yesterday’s price action, downward momentum has picked up and the chance for a break below 1.3020 appears to be higher than even. Looking further ahead, a clear break below 1.3020 would indicate GBP is ready to challenge the next support at 1.2940″.