GBP/USD: Still room for a decline to 1.3250 – UOB

Cable could still attempt a move to the 1.3250 level in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectations for ‘the rebound in GBP to extend’ were incorrect as it dropped to 1.3318 during NY session. While downward momentum has not improved by much, the risk is for GBP to head lower. In view of the lackluster momentum, the major support at 1.3250 is unlikely to come under threat (there is another strong support at 1.3275). Resistance is at 1.3360 followed by 1.3390.”

Next 1-3 weeks: “Yesterday (03 Mar, spot at 1.3330), we highlighted that downward momentum has waned somewhat and a breach of the strong resistance at 1.3460 would indicate that 1.3250 is out of reach. GBP subsequently rose to 1.3418 before dropping back down to 1.3318. Downward momentum still appears to be lackluster but there is still chance for GBP to decline to 1.3250. Only a breach of the ‘strong resistance’ at 1.3420 (level was at 1.3460 yesterday) would indicate that the downside risk has dissipated.”