Pound Sterling (GBP) is likely to trade in a range between 1.3290 and 1.3365. In the longer run, downward momentum has slowed somewhat, but there is still a chance for GBP to decline to 1.3200, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum has slowed somewhat
24-HOUR VIEW: “The following are excerpts from our update yesterday: ‘Despite the relatively quiet price movements, there has been a slight increase in downward momentum. Today, GBP may edge lower, but any decline is likely part of a lower range of 1.3295/1.3350. To put it another way, GBP does not appear to have enough momentum to break below 1.3295.’ We did not expect the downward momentum to accelerate quickly, as GBP plunged to a low of 1.3249. GBP rebounded from the low and closed slightly lower by 0.12% at 1.3320. The rebound from oversold conditions suggests that instead of continuing to decline, GBP is more likely to trade in a range today, expected to be between 1.3290 and 1.3365.”
1-3 WEEKS VIEW: “On Monday (13 Oct, spot at 1.3350), we highlighted that while downward momentum has slowed with the recent recovery, ‘there is still a chance for GBP to decline to 1.3200.’ While GBP dropped to a low of 1.3249 yesterday, it rebounded strongly from the low. There has been no improvement in downward momentum, and we continue to hold the same view for now. Overall, only a breach of 1.3390 (no change in ‘strong resistance’ level) would suggest that the weakness in GBP that started in the middle of last week has stabilised.”
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