British Pound: Downside seen limited near 1.3140 against US Dollar - UOB

UOB strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD failed to extend gains above 1.3286 and instead retreated to 1.3194, closing at 1.3213. Short-term momentum has turned mildly negative, with the pair expected to consolidate within a lower 1.3180–1.3235 intraday band. Over the next one to three weeks, they see downside risk contained above 1.3140 within a broader 1.3140–1.3280 range.

Pound biased lower but downside limited

"24-HOUR VIEW: After GBP rose to a high of 1.3286 on Tuesday, we highlighted the following yesterday: “Upward momentum has increased, albeit not significantly. Today, there is a chance for GBP to retest 1.3285. A continued rise above this level is unlikely.” The subsequent price movements did not unfold as expected, as GBP declined to a low of 1.3194. Despite the decline, downward momentum has not increased significantly. Today, GBP could edge lower, but it is likely to stay within a 1.3180/1.3235 range."

"1-3 WEEKS VIEW: Following Tuesday’s price action, we highlighted yesterday (07 Oct, spot at 1.3265) that “there has been a slight increase in upward momentum, and GBP may edge higher toward 1.3315.” Our view was invalidated quickly as GBP fell below our ‘strong support’ at 1.3200 with a low of 1.3194. This time around, there has been a slight increase in downward momentum, but it is insufficient to indicate a sustained decline. From here, GBP could edge lower, but any decline is likely to be part of a lower range of 1.3140/1.3280. In other words, GBP is unlikely to break clearly below 1.3140."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)