GBP/USD: Downside gathers further momentum – UOB

Cable remains under pressure and could grind lower to the 1.3260 region in the short-term horizon.

Key Quotes

24-hour view: “The sharp drop in GBP to 1.3317 yesterday came as a surprise (we were expecting GBP to trade between 1.3350 and 1.3410). While the rapid drop has room to dip below the major support at 1.3300, a sustained decline below this level is unlikely. The next support is at 1.3260. Resistance is at 1.3365 but only a breach of 1.3385 would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (24 Nov, spot at 1.3375), we highlighted that ‘risk is still on the downside but slim chance for GBP to move to 1.3300’. We did not anticipate the subsequent sharp drop to 1.3317. In view of the improved downward momentum, a break of 1.3300 would not be surprising. The next level to focus on below 1.3300 is at 1.3260. Overall, the downside risk is deemed intact as long as GBP does not move above 1.3410 (‘strong resistance’ level was at 1.3445 yesterday).”