GBP/USD: Can dip towards 1.2940 - UOB Group

The Pound Sterling (GBP) could dip towards 1.2940 again before a more sustained rebound is likely. In the longer run, GBP must break and remain below 1.2940 before a resumption of weakness can be expected, UOB Group's FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP must break and remain below 1.2940 to dip further

24-HOUR VIEW: "On Monday, GBP fell sharply. Yesterday (Tuesday), when GBP was at 1.2980, we were of the view that it 'is likely to continue to weaken, even though the 1.2940 level is expected to provide strong support.' During NY trade, GBP fell to a low of 1.2945 before rebounding. It then closed largely unchanged at 1.2985 (+0.01%). Downward momentum has increased slightly, but there is a chance for GBP to dip towards 1.2940 again before a more sustained rebound is likely. GBP is unlikely to break clearly below 1.2940. On the upside, should GBP break above 1.3015 (minor resistance is at 1.3000), it would mean that the current mild downward pressure has faded."

1-3 WEEKS VIEW: "We highlighted yesterday (22 Oct, spot at 1.2980) that GBP 'must break and remain below 1.2940 before a resumption of weakness can be expected.' We also highlighted that 'The likelihood of GBP breaking clearly below 1.2940 will remain intact, provided that the 'strong resistance' level at 1.3060 is not breached in the next couple of days.' Our view remains unchanged."