GBP/USD faces extra losses below 1.3480 – UOB

Cable faces the likeliness of a deeper pullback on a break below 1.3480, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “We did not anticipate the sudden sharp sell-off that sent GBP plunging to 1.3522. While deeply oversold, it is too early to expect a rebound. GBP could weaken further but the major support at 1.3480 is unlikely to come into the picture today (there is a minor support at 1.3500). Resistance is at 1.3570 followed by 1.3610.”

Next 1-3 weeks: “We highlighted yesterday (28 Sep, spot at 1.3730) that ‘while the underlying tone has weakened a tad, a sustained decline in GBP is likely only if it closes below 1.3610’. However, we did not anticipate the rapid decline that cracked 1.3610 and the sharp sell-off to 1.3522. While shorter-term conditions are deeply oversold, GBP is likely to weaken further to 1.3480. Looking ahead, a clear break of 1.3480 could potentially lead to further rapid decline (next support is at 1.3370). The current negative outlook is deemed intact as long as GBP does not move above 1.3650.”