A break of 1.30 could prompt GBP/USD to test 1.2920/25 – UOB

In view of FX Strategists at UOB Group, Cable should shift its attention to 1.2920/25 if 1.3000 is cleared.

Key Quotes

24-hour view: “The anticipated weakness exceeded our expectation as the decline in GBP not only took out 1.3080 but cracked the next support at 1.3035 (overnight low of 1.3017). From here, all eyes are on the major 1.3000 support and a break of this level could lead to a rapid drop in GBP. While the next significant support is at 1.2925, this level is likely out of reach for now (there is a minor support at 1.2960). Resistance is at 1.3050 followed by 1.3085”.

Next 1-3 weeks: “GBP plunged and lost -0.70% yesterday as it closed at 1.3019 in NY. While the bottom of our expected 1.3000/1.3250 consolidation range is still intact, the impulsive decline suggests further GBP weakness is likely in the coming days. As highlighted yesterday (18 Oct, spot at 1.3110), “a break of 1.3000 would suggest that GBP is ready to tackle the 1.2922 low seen earlier this month” (even though the anticipated price action has evolved much faster than expected). In other words, instead of trading sideways, GBP has likely moved into a ‘negative’ phase. Only a break of the ‘key resistance’ at 1.3125 would indicate that the current downward pressure has eased”.