The Pound Sterling (GBP) is expected to continue weaken, potentially to 1.3035. The major support at 1.3000 is unlikely to come under threat, UOB Group FX strategists Quek Ser Leang and Peter Chia note.
Falling below 1.3035 may target 1.3000
24-HOUR VIEW: “When GBP was at 1.3130 yesterday, we noted that ‘there has been a slight increase in downward momentum.’ We were of the view that GBP could dip below 1.3100 but we indicated that ‘any decline is not expected to reach 1.3060.’ While our view of a lower GBP was correct, it fell more than expected to 1.3068. Not unexpectedly, the decline has led to an increase in momentum, and today, we continue to expect GBP to weaken, potentially to 1.3035. The major support at 1.3000 is unlikely to come under threat. To keep the momentum going, GBP must remain below 1.3115 with minor resistance at 1.3090.”
1-3 WEEKS VIEW: “Yesterday (09 Sep, spot at 1.3130), we noted that ‘the recent price action has resulted in a modest increase in downward momentum.’ We highlighted that ‘as long as 1.3250 is not breached, we expect GBP to drift lower, possibly reaching 1.3050.’ We added, ‘the likelihood of GBP breaking clearly below this level seems low for now.’ We did not expect GBP to drop as much and as quickly as it fell to a low of 1.3068 in NY trade. From here, we continue to expect GBP to weaken. The next level to watch is 1.3000. We will hold the same view provided that 1.3140 (‘strong resistance’ level was at 1.3250 yesterday) is not breached.”
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