The Pound Sterling (GBP) is likely to trade in a range, probably between 1.2860 and 1.2950. In the longer run, GBP must break and remain below 1.2845 before a sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Below 1.2845 a sustained decline can be expected
24-HOUR VIEW: “Yesterday, GBP fell by 0.48%, closing at a 2-1/2-month low of 1.2899. The sharp drop appears to be overdone, and GBP is unlikely to weaken much further. Today, GBP is more likely to trade in a range, probably between 1.2860 and 1.2950.”
1-3 WEEKS VIEW: “We indicated on Wednesday (30 Oct, spot at 1.3010) that ‘While GBP is expected to trade in a 1.2950/1.3070 range for now, the slightly firm underlying tone suggests it will likely test the top of the range first.’ GBP subsequently rose to 1.3043, but in a sudden move yesterday, it plunged sharply to a low of 1.2845. While there has been a buildup in momentum, GBP must break and remain below 1.2845 before further sustained decline can be expected. The likelihood of GBP breaking clearly below 1.2845 will remain intact, provided that 1.2985 is not breached. Looking ahead, the next level to watch below 1.2845 is 1.2795.”
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