Bears may push towards 1.3035 – UOB Group

The pound sterling (GBP) is expected to continue to weaken, potentially at 1.3035. Major support at 1.3000 is unlikely to be threatened, note UOB Group FX strategists Quek Ser Leang and Peter Chia.

Break below 1.3035 may target 1.3000

24 HOUR VIEW: “When GBP was at 1.3130 yesterday, we noted that ‘there was a slight increase in downward momentum.’ We were of the view that GBP could fall below 1.3100, but indicated that “any downside to 1.3060 is not expected”. While our view of a lower GBP was correct, it fell further than expected to 1.3068. Not unexpectedly, the decline saw momentum build and today we continue to expect GBP to weaken, potentially to 1.3035. Major support at 1.3000 is unlikely to be threatened. To maintain momentum, GBP needs to stay below 1.3115 with minor resistance at 1.3090.”

WEEKS 1-3: “Yesterday (September 09, spot at 1.3130), we noted that ‘recent price action has resulted in a modest increase in downside momentum.’ We pointed out that “as long as 1.3250 is not breached, we expect GBP to decline, possibly reaching 1.3050”. I added, “the likelihood of GBP falling clearly below this level looks low at the moment.” We did not expect the GBP to fall as much and as fast as it did to a low of 1.3068 in NY trade. From here, we continue to expect the GBP to weaken. The next level to watch is 1.3000. We will be of the same opinion, provided 1.3140 (the ‘strong resistance’ level was at 1.3250 yesterday) is not breached.”