According to FX Strategists at UOB Group, Cable’s downside could extend to the 1.3750 region in the short-term horizon.
24-hour view: “We expected GBP to ‘retest the 1.3980 level first before a more sizeable pullback can be expected’ last Friday. Our view was wrong as GBP plummeted and cracked several support levels with ease (low has been 1.3803). The swift and sharp drop appears to be running ahead of itself but there is no sign of stabilization just yet. From here, GBP could test the support at 1.3790 first before stabilization can be expected. The next support at 1.3750 is likely ‘safe’ for today. Resistance is at 1.3845 followed by 1.3870.”
Next 1-3 weeks: “Our view from last Thursday (29 Apr, spot at 1.3950) where GBP ‘is expected to trade with an upward bias towards 1.4010’ is proven incorrect as GBP plunged through our ‘strong support’ level at 1.3850 on Friday (low of 1.3803). The sudden and sharp drop has scope to extend to 1.3750. At this stage, a sustained decline below this level appears unlikely. The current downside bias in GBP is deemed intact unless GBP can move above the ‘strong resistance’ level at 1.3910.”
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