UOB Group FX analysts Quek Ser Leang and Peter Chia note that despite a lack of significant bearish momentum, Sterling (GBP) appears poised to test major support at 1.3370. Over the longer term, they project a potential decline to 1.3370, with scope to reach 1.3340.
24-HOUR VIEW: Following Thursday’s low of 1.3418, GBP showed unexpected weakness during Friday’s New York session. Despite our initial expectations that major support at 1.3400 would hold, prices dropped to 1.3393 before closing softly at 1.3402 (down 0.30%). Even without strong downward momentum, a test of the major 1.3370 support level is possible today, though a clear break below it seems unlikely. Immediate resistance lies at 1.3420 and 1.3440.
1-3 WEEKS VIEW: As highlighted last Thursday, downside risks for GBP have been building. Friday’s break below the 1.3400 level (hitting a low of 1.3393) indicates that downward momentum has increased, albeit modestly. Consequently, we anticipate GBP could decline toward 1.3370, potentially extending to 1.3340. We will maintain this negative outlook as long as price action remains below the ‘strong resistance’ level of 1.3475
