GBP/USD: Downward momentum has surged - UOB Group

The Pound Sterling (GBP) is expected to continue to decline, but it remains to be seen if the major support at 1.2665 is within reach today. Un the longer run, downward momentum has surged; the next technical target is at 1.2665, UOB Group's FX analysts Quek Ser Leang and Lee Sue Ann note.

The next technical target is at 1.2665

24-HOUR VIEW: "GBP fell to a low of 1.2858 on Monday. When GBP was trading at 1.2870 yesterday, we pointed out that 'there is scope for GBP to drop to 1.2835.' We also pointed out that 'the major support at 1.2800 is unlikely to come under threat.' The sudden surge in downward momentum was surprising, as GBP broke below 1.2800 and plunged to 1.2719. GBP closed sharply lower by 0.96% at 1.2747. The impulsive downward momentum is likely to outweigh the deeply oversold conditions. In other words, GBP is expected to continue to decline, but it remains to be seen if the major support at 1.2665 (low in early August) is within reach today. On the upside, any rebound is likely to remain below 1.2810 with minor resistance at 1.2760."

1-3 WEEKS VIEW: "Yesterday (12 Nov, spot at 1.2870), we highlighted that the 'Slight buildup in momentum indicates GBP is likely to edge lower.' We also highlighted that 'the 1.2800 level is expected to provide significant support.' The anticipated support at 1.2800 did not materialise as GBP plunged through this level and reached 1.2719. Downward momentum has surged as well. The next technical target is at 1.2665, the low in early August. We will continue to expect GBP to weaken as long as 1.2845 ('strong resistance' level was at 1.2975 yesterday) is not breached."