According to UOB Group’s FX Strategists, cable’s outlook remains weak, and it could re-test the 1.3715 level in the coming weeks.
Observation for 24 hours: “We predicted that GBP would ‘dip below 1.3790’ yesterday, but that ‘the major support at 1.3750 is not expected to come into play’. The slide in the GBP came to a halt around 1.3753, confirming our prediction. Despite the drop, the declining trend has not slowed significantly. However, it is too early to expect a turnaround. GBP could fall today, but the major support at 1.3715 is unlikely to be reached. A break above 1.3815 (minor resistance at 1.3790) on the upside would imply that the current negative pressure has abated.”
Within the next 1-3 weeks: “‘Downward momentum is beginning to improve, but only a NY closing below 1.3790 would indicate the start of a new weak phase in GBP,’ we said on Wednesday (30 June, spot at 1.3840). However, the sudden decline in GBP to 1.3753 yesterday (01 Jul) and the weak finish at 1.3764 caught us off guard. The price actions indicate that the pound has entered a weak phase. A breach of 1.3750 would not be surprising given the rapid improvement in momentum. Below 1.3750, the next level to watch is 1.3715. The next important support level to watch is 1.3670. As long as GBP does not rise over 1.3845 (the’strong resistance’ mark was at 1.3905 yesterday), the poor phase will continue.”/n
