Cable faces a potential move to the 1.3670 level in the short-term, suggested FX Strategists at UOB Group.
24-hour view: “While we expected GBP to weaken yesterday, we were of the view that ‘the next support at 1.3750 is unlikely to come under threat’. The ease by which GBP plummeted through 1.3750 came as a surprise (overnight low of 1.3725). The rapid decline is deep in oversold territory but robust downward momentum could lead to a test of 1.3700. For today, the March low near 1.3670 is likely out of reach. On the upside, a break of 1.3800 (minor resistance is at 1.3770) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “Yesterday (07 Apr, spot at 1.3830), we highlighted that the ‘outlook is mixed’ and we expected GBP to ‘trade between 1.3750 and 1.3950’. However, GBP easily cracked 1.3750 as it fell to 1.3725. While the two days of back-to-back sharp drop appears to be overdone, there is room for GBP to test last month’s low near 1.3670. At this stage, the prospect for a sustained decline below this level is not high. Overall, current downward pressure is deemed intact as long as GBP does not move above 1.3840.”
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