GBP/USD: Might drop to 1.3385 before recoverin - UOB Group

Pound Sterling (GBP) could drop to 1.3385 before recovering; the major support at 1.3325 is not expected to come into view. In the longer run, there has been a tentative buildup in downward momentum; GBP could edge lower, but it is unclear if it can reach 1.3325, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Major support at 1.3325 is not expected to come into view

24-HOUR VIEW: "Our view for the 'rebound in GBP to extend' was incorrect, as it dropped sharply to a low of 1.3394, then recovered to close at 1.3422 (- 0.47%). Downward momentum has increased, but not much. Today, GBP could drop to 1.3385 before another recovery is likely. We do not expect the major support at 1.3325 to come into view. Resistance is at 1.3445, followed by 1.3465."

1-3 WEEKS VIEW: "We have expected GBP to trade in a range since late last month. Yesterday (07 Oct, spot at 1.3480), we stated that 'we continue to expect range-trading, but a narrower range of 1.3400/1.3525 is likely sufficient to contain the price movements for now.' We did not expect GBP to drop to a low of 1.3394. The price action has resulted in a tentative buildup in downward momentum. From here, we expect GBP to edge lower, but currently, it is unclear whether there is sufficient momentum for it to reach last month's low, near 1.3325. On the upside, if GBP breaks above 1.3485 ('strong resistance' level), it would indicate that the downward bias has faded."