Expected to drift lower, potentially below 1.3050 – UOB Group

The Pound Sterling (GBP) is expected to drift lower, potentially dropping below 1.3050; lackluster momentum suggests 1.3000 is out of reach. In the longer run, price action suggests further GBP weakness; the next major support at 1.3000 may not come into view so soon, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Momentum suggests 1.3000 is out of reach

24-HOUR VIEW: “Yesterday, we expected GBP to trade in a sideways range of 1.3065/1.3135. GBP subsequently traded between 1.3057 and 1.3106, closing slightly lower at 1.3075 (-0.21%). The mild decline resulted in a slight increase of momentum. Today, we expect GBP to drift lower, potentially dropping below 1.3050. Due to the lackluster momentum, any decline is unlikely to reach 1.3000. Resistance levels are at 1.3090 and 1.3115.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since the middle of last week (as annotated in the chart below). In our most recent narrative from Monday (07 Oct, spot at 1.3130), we indicated that ‘although the recent price action suggests further GBP weakness, conditions are oversold, and the next major support at 1.3000 may not come into view so soon.’ There is no change in our view. Overall, only a breach of 1.3150 (‘strong resistance’ level previously at 1.3185) would suggest that the current downward pressure has eased.”