GBP/USD might not reach 1.3260 today – UOB Group

Pound Sterling (GBP) could decline further, but it might not reach 1.3260 today. In the longer run, GBP is expected to continue to decline; the next level to watch is 1.3260, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP is expected to continue to decline

24-HOUR VIEW: “After GBP plummeted to a low of 1.3427 two days ago, we indicated yesterday that ‘the sharp drop appears excessive, but with no sign of stabilisation just yet, GBP could retest the 1.3430 support level.’ However, we noted that ‘based on the oversold momentum, a sustained break below this level is unlikely.’ We also noted that ‘the next major support at 1.3365 is also unlikely to come under threat for now.’ However, GBP dropped below 1.3430 during the London session and then plunged in the NY session, reaching a low of 1.3324. The sharp drop over the past couple of days appears to be excessive, but as long as GBP holds below 1.3400 (minor resistance is at 1.3370), it could decline further. That said, it might not reach the next support at 1.3260 today. Note that there is another support level at 1.3290.”

1-3 WEEKS VIEW: “Following the sharp drop in GBP two days ago, we highlighted yesterday (25 Sep, spot at 1.3455) that ‘the boost in downward momentum could lead to GBP declining toward 1.3365.’ We did not expect GBP to breach 1.3365 so quickly, as it dropped to a low of 1.3324 yesterday. Given the increasing downward momentum, we continue to expect GBP to decline. The next level to watch is 1.3260. Overall, only a breach of 1.3445 (‘strong resistance’ level was at 1.3520 yesterday) would indicate that downward pressure that started late last week has eased.”