GBP/USD faces a solid support at 1.3250 – UOB

In opinion of FX Strategists at UOB Group, further decline in cable should face a tough support around 1.3250 in the near term.

Key Quotes

24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘any weakness is expected to encounter solid support at 1.3500’. However, GBP not only cracked 1.3500 but also a few other major support levels with ease as it plummeted to 1.3273 before rebounding. Deeply oversold conditions suggest GBP is unlikely to weaken further. For today, GBP is more likely to consolidate and trade between 1.3320 and 1.3450.”

Next 1-3 weeks: “The sudden and sharp plunge in GBP yesterday came as a surprise. The outsized decline appears to be overdone but only a break of 1.3505 (‘strong resistance’ level) would indicate that the current weakness has stabilized. In other words, further GBP weakness is not ruled out. That said, the NY low of 1.3273 is not far above a major support at 1.3250. On the upside, a breach of 1.3505 would indicate that the current weakness has stabilized.”