In opinion of FX Strategists at UOB Group, Cable faces a potential deeper pullback if 1.4080 is cleared in the near-term.
Key Quotes
24-hour view: “We expected GBP to ‘trade between 1.4120 and 1.4185 yesterday’. GBP subsequently rose to 1.4190 before dropping sharply to 1.4110 during NY hours. While the rapid decline has room to dip below the major support at 1.4100, a break of last week’s low near 1.4080 appears unlikely. Resistance is at 1.4140 followed by 1.4165.”
Next 1-3 week: “We highlighted yesterday (09 Jun, spot at 1.4155) that ‘the outlook is unclear’ and we expected GBP to ‘trade between 1.4100 and 1.4205’. GBP subsequently rose to 1.4190 before dropping sharply to 1.4110. While shorter-term downward momentum is beginning to improve and a break of 1.4100 would not be surprising, GBP has to close below 1.4080 before a sustained decline can be expected. At this stage, the prospect for GBP to close below 1.4080 is not high but it would increase further as long as GBP does not move above 1.4185 within these few days.”