In opinion of FX Strategists at UOB Group, Cable is likely to slip back to the 1.3260 region in the next weeks.
24-hour view: “We highlighted last Friday that we ‘still see chance for GBP to dip below 1.3300 before a more sizeable rebound can be expected’. We added, ‘the next support at 1.3260 is unlikely to come into the picture’. Our view was not wrong as GBP briefly dipped to 1.3278 before rebounding. Downward pressure has eased and this coupled with oversold conditions suggest that the current movement is part of a consolidation phase. In other words, GBP is likely to trade sideways for today, expected to be within a range of 1.3300/1.3365.”
Next 1-3 weeks: “Our latest narrative was from last Thursday (25 Nov, spot at 1.3335) where we noted that downward momentum has improved and a break of 1.3300 would shift the focus to 1.3260. GBP cracked 1.3300 on Friday, dropped to 1.3278 before rebounding strongly. Oversold shorter-term conditions could lead to consolidation first. As long as 1.3390 (no change in ‘strong resistance’) is intact, there is room for GBP to drop to 1.3260. At this stage, a sustained decline below 1.3260 is unlikely.”
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