Cable’s downside carries the potential to extend to the 1.2500 neighbourhood in the next weeks, noted FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Our expectations for GBP to trade sideways yesterday were incorrect as it plunged to a low 1.2571. Further GBP weakness is not ruled but deeply oversold conditions suggest a slower pace of decline and 1.2500 is likely out of reach for today (minor support at 1.2550). Resistance is at 1.2625 followed by 1.2675.”

Next 1-3 weeks: “Yesterday (26 Apr, spot at 1.2740), we highlighted that GBP is still under pressure and next levels to focus on are at 1.2650 and 1.2600. While our view for a weak GBP was not wrong, we did quite expect the rapid pace of decline as GBP cracked both 1.2650 and 1.2600 and dropped to a low of 1.2571. Further GBP weakness is not ruled but it is left to be seen if it can maintain the current rapid pace of decline. Note that GBP lost a whopping 3.49% over the last 3 days. All in, only a breach of 1.2750 (‘strong resistance’ level was at 1.2900 yesterday) would indicate that the bearish phase that started two days has run its course. Next support levels are at 1.2500 and 1.2420.”