Cable is poised to extend the downside in the short-term horizon, noted FX Strategists at UOB Group.
24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘the major support at 1.3354 is unlikely to come into the picture’. The subsequent weakness exceeded our expectations as GBP dropped to 1.3344 before rebounding. Downward momentum is beginning to wane and GBP is unlikely to weaken further. For today, GBP is likely to trade sideways between 1.3350 and 1.3410.”
Next 1-3 weeks: “On Monday (22 Nov, spot at 1.3435), we highlighted that ‘while GBP could dip below 1.3354, downward momentum is not strong and the chance for a sustained decline below this level is not high’. We added, ‘the next support is at 1.3300’. GBP dropped to 1.3344 yesterday (23 Nov) before rebounding. Despite the breach of 1.3354, downward momentum has barely improved. That said, as long as 1.3445 (‘strong resistance’ level was at 1.3480 yesterday) is not breached, there is chance, albeit a slim one, for GBP to edge lower towards 1.3300.”