In opinion of FX Strategists at UOB Group, Cable could now visit the 1.3400 handle in the next weeks.
24-hour view: “Instead of ‘probing’ the 1.3510 support (as expected yesterday), GBP sliced through this level and plummeted to a low of 1.3452. The decline was however short-lived as GBP rebounded strongly from the low. Despite the bounce, the undertone is still weak and a retest of the major 1.3450/60 support zone seems likely. At this stage, a sustained below these support levels is not expected. Resistance is at 1.3540 followed by 1.3570”.
Next 1-3 weeks: “We have held the same view since 04 May (spot at 1.3570) that while the outlook for GBP is still deemed as bearish, the odds for further weakness to the year-to-date low of 1.3458 are not high. After trading sideways for more than a week, GBP finally perked up and managed to dip below this level (overnight low of 1.3452). Downward momentum has picked up again and this could lead to further weakness to 1.3400 within the next week or so. On the upside, the ‘stop-loss’ level is currently at 1.3600, down from 1.3630 previously”.
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