GBP/USD: Any decline may be limited to a retest of the 1.3460 level - UOB Group

Further Pound Sterling (GBP) weakness is not ruled out against US Dollar (USD); oversold conditions suggest any decline may be limited to a retest of the 1.3460 level. In the longer run, tentative increase in downward momentum suggests GBP is likely to trade with a downward bias toward 1.3430, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is likely to trade with a downward bias toward 1.3430

24-HOUR VIEW: "Our view for GBP to trade in a range yesterday was incorrect, as it plunged to 1.3458, rebounding to close at 1.3498, down by 0.38%. While further GBP weakness is not ruled out today, oversold conditions suggest that any decline may be limited to a retest of the 1.3460 level. The next support at 1.3420 is unlikely to come under threat. Resistance levels are at 1.3525 and 1.3555."

1-3 WEEKS VIEW: "We turned positive on GBP early last week. In our latest narrative from two days ago (09 Jun, spot at 1.3540), we highlighted that 'as long as 1.3500 is not breached, there is a chance for GBP to retest 1.3615 before the risk of a more sustained and sizeable pullback increases.' Yesterday, GBP broke below 1.3500, reaching a low of 1.3458. Upward momentum has faded, and there has been a tentative increase in downward momentum. From here, GBP is likely to trade with a downward bias toward 1.3420. A clear break of this level could potentially trigger a deeper decline. The downward bias will remain intact as long as the 'strong resistance' level at 1.3580 is not breached."