the next significant support at 1.2490 is out of reach – UOB Group

A break of 1.2565 will not be surprising; the next significant support at 1.2490 is not expected to come into view for now. In the longer run, momentum received a boost; GBP is likely to break below 1.2565. The next level to monitor is 1.2490, UOB Group’s FX strategists Quek Ser Leang and Lee Sue Ann note.

The next level to monitor is 1.2490

24-HOUR VIEW: “We highlighted yesterday that ‘further range trading appears likely, even though the softened underlying tone suggests a lower range of 1.2615/1.2685.’ The sudden plunge that sent GBP to a low of 1.2577 was surprising. Given the rapid increase in momentum, a break of 1.2565 will not be surprising. However, deeply oversold conditions could indicate that the next significant support at 1.2490 is not expected to come into view for now. To sustain the momentum, USD must remain below 1.2640 (minor resistance is at 1.2615).”

1-3 WEEKS VIEW: “We have held a negative view in GBP since early last week. On Wednesday (20 Nov), when GBP was at 1.2685, we pointed out that ‘downward momentum is beginning to slow.’ We added, ‘a break above 1.2725 would mean that the major support at 1.2565 is out of reach.’ GBP subsequently rose briefly to 1.2713, and then pulled back. Yesterday, in a sudden move, GBP plunged to a low of 1.2577. Not surprisingly, downward momentum received a boost. From here, GBP is likely to break below 1.2565. The next level to monitor is 1.2490. On the upside, the ‘strong resistance’ level has moved lower to 1.2665 from 1.2725.”