The Pound Sterling (GBP) could continue to weaken; oversold conditions suggest 1.2860 is likely out of reach for now. In the longer run, price action suggests GBP could decline further to 1.2860, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Has a chance to fall towards 1.2860
24-HOUR VIEW: “Two days ago, we expected GBP to weaken, but we were of the view that ‘the 1.2940 level is expected to provide strong support.’ After GBP dropped to 1.2945 and rebounded, we indicated yesterday that ‘there is a chance for GBP to dip towards 1.2940 again before a more sustained rebound is likely.’ However, GBP broke clearly below 1.2940 and dropped further to 1.2908. GBP could continue to weaken today, but severely overbought conditions suggest 1.2860 is likely out of reach for now. There is another support level at 1.2890. Resistance levels are at 1.2940 and 1.2965.”
1-3 WEEKS VIEW: “Our most recent narrative was from Tuesday (22 Oct, spot at 1.2980), wherein GBP ‘must break and remain 1.2940 before a resumption of weakness can be expected.’ We highlighted that ‘The likelihood of GBP breaking clearly below 1.2940 will remain intact, provided that the ‘strong resistance’ level at 1.3060 is not breached in the next couple of days.’ Yesterday, GBP broke clearly below 1.2940. The price action indicates GBP could decline further to 1.2860. On the upside, the ‘strong resistance’ level has moved lower to 1.3000 from 1.3060.”
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