FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang noted further downside in GBP/USD could target the 1.2650 level and probably 1.2600 in the short term.

Key Quotes

24-hour view: “While we expected GBP to ‘weaken further’ yesterday, we were of the view that ‘any further weakness could be limited to a test of 1.2770’. The subsequent weakness exceeded our expectations by a wide margin as GBP plunged to a low of 1.2697 before rebounding. Conditions remain deeply oversold and GBP is unlikely to weaken much further. For today, GBP is more likely to trade between 1.2690 and 1.2790.”

Next 1-3 weeks: “We turned negative in GBP yesterday (25 Apr, spot at 1.2830) and we were of the view that it ‘could weaken to 1.2770, as low as 1.2730’. We did not expect the ease by GBP cracked both 1.2770 and 1.2730 as it plunged to 1.2697. We continue to hold a negative view even though oversold shorter-term conditions could lead to 1 to 2 days of consolidation first. Looking ahead, the next levels to monitor are at 1.2650 and 1.2600. Overall, GBP is expected to stay under pressure as long as it does not move above 1.2900 (‘strong resistance’ level was at 1.2940 yesterday.”