Scope for GBP to drop to 1.2835; given the oversold conditions, the major support at 1.2800 is unlikely to come under threat. In the longer run, slight buildup in momentum indicates GBP is likely to edge lower; the 1.2800 level is expected to provide significant support, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
GBP is likely to edge lower
24-HOUR VIEW: “Last Friday, GBP fell to a low of 1.2885. Yesterday (Monday), when GBP was at 1.2910 yesterday, we highlighted that ‘there is room for GBP to dip below the 1.2885 low before a more sustained rebound is likely.’ We added, ‘the major support at 1.2850 is unlikely to come under threat.’ While our view was validated as GBP fell to a low of 1.2858, there is no sign of a rebound just yet. Today, there is scope for GBP to drop to 1.2835. Given the oversold conditions, the major support at 1.2800 is unlikely to come under threat. On the upside, should GBP break above 1.2910 (minor resistance is sat 1.2890), it would suggest that the weakness in GBP has stabilised.”
1-3 WEEKS VIEW: “Last Friday (08 Nov, spot at 1.2980), we highlighted that, ‘the recent buildup in downward momentum has faded, and the outlook is unclear.’ We expected GBP to ‘trade in a range between 1.2850 and 1.3055.’ Yesterday, GBP dropped to a low of 1.2858. There has been a slight buildup in downward momentum. From here, GBP is likely to edge lower, but the 1.2800 level is expected to provide significant support. To maintain the buildup in momentum, GBP remain below 1.2975”
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