Cable’s upside faces a solid hurdle in the 1.3050 level, suggested FX Strategists at UOB Group.
24-hour view: “Our expectation for GBP ‘to test 1.3080 first before a more a more sustained pull-back can be expected’ was wrong as it plunged to a low of 1.2891 (high has been 1.3031). While the decline is oversold, there is no sign of stabilization just yet. For today, GBP could weaken further but the odds for a clear break of the major support at 1.2845 are not high (next support is at 1.2800). Resistance is at 1.2855 followed by 1.2995.”
Next 1-3 week: “We indicated yesterday (15 Oct, spot at 1.3015) that ‘the rapid swings have resulted in a mixed outlook’ and GBP ‘could trade between 1.2845 and 1.3120 for a period of time’. GBP subsequently gave up most of its gains from Wednesday (14 Oct) as it dropped to 1.2891 before closing on a weak note at 1.2899 (-0.85%). While the underlying tone has weakened, it is too soon to expect a sustained decline below 1.2845. Overall, GBP is likely to trade on a slightly defensive mode with 1.3050 acting as a strong resistance.”
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