May not reach 1.3000 – UOB Group

Price action suggests further weakness in the British Pound (GBP); The next major support at 1.3000 may not come so soon, note UOB Group FX analysts Quek Ser Leang and Peter Chia.

Downside risk remains intact below 1.3220

24 HOUR OUTLOOK: “After the GBP fell sharply last Thursday, we indicated on Friday that ‘weakness has not stabilized’. We also indicated that GBP “could fall to 1.3080 before stabilization can be expected”. In NY trade, GBP fell to 1.3070, rebounding quickly to end the day largely unchanged at 1.3123 (-0.03%). The price action is probably part of a sideways trading phase. Today, we expect GBP to trade in the 1.3080/1.3180 range.”

WEEKS 1-3: “Our update from last Friday (October 04, spot at 1.3130) remains valid. As pointed out, although recent price action suggests further GBP weakness, near-term conditions are heavily oversold and the next major support at 1.3000 may not come in anytime soon. The downside risk will remain intact provided GBP does not break above 1.3220 (the ‘strong resistance’ level was at 1.3255 last Friday).”