Cable’s stance remains offered and could recede further to the 1.2220 region, suggested FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that GBP ‘could weaken further but the major support at 1.2270 is likely out of reach for today’. The subsequent weakness exceeded our expectation as GBP plummeted to 1.2252 before rebounding quickly. Downward momentum is beginning to show sign of slowing and this coupled with severely oversold condition suggest GBP could take a breather and consolidate for today, likely between 1.2250 and 1.2365.”
Next 1-3 weeks: “Yesterday (29 Jun, spot at 1.2335), we held the view that GBP ‘could weaken to 1.2270 but the prospect for a move to 1.2220 is not high for now’. The pace of the anticipated decline was faster than expected as GBP dropped to a low of 1.2252. From here, GBP could weaken to 1.2220 and if it closes below this level, further weakness to 1.2160 would not be surprising. All in, GBP is deemed to be under pressure unless it can break above 1.2400 (‘strong resistance’ level was at 1.2450 yesterday).”
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