In opinion of FX Strategists at UOB Group, Cable still remains entrenched in a ‘negative phase’ and keeps targeting 1.1985.
Key Quotes
24-hour view: “A rebound in GBP on Mon pared half of the losses sustained on Fri and neutralized a significant part of the downside momentum. For today, GBP may look to ‘stabilize’ further although upside is still limited at 1.2120. On the downside, support is at 1.2050 and only a strong breakout below 1.2015 would indicate GBP is ready to resume its downside yet again”.
Next 1-3 weeks: “The downward acceleration over the past couple of days could be attributed to the lack of significant support levels. From here, if GBP were to crack 1.2110, it could lead to further steep decline as the next support is more than 100 pips lower at 1.1985. That said, 1.1985 is just a minor low in Jan 2017 (on the weekly chart) and it is left to be seen how much support it can offer (if GBP were to move to this level). Below this level, the more significant support would be the Oct 2016 ‘flash crash’ low of 1.1491. All in, despite being oversold, the current weakness in GBP is not showing sign of stabilizing just yet. Only a break of the 1.2220 ‘key resistance’ (level was at 1.2260 yesterday) would suggest that the decline in GBP is ready to take a breather.”
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