In opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, cable still risks a deeper pullback to the 1.2200 neighbourhood.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the weakness in GBP appears to have stabilized somewhat’ and ‘GBP is unlikely to weaken much further’. We expected GBP to ‘trade between 1.2270 and 1.2370’. GBP subsequently traded within a wider range than expected (1.2262//1.2405) before closing little changed at 1.2330 (-0.07%). The movement is likely part of a consolidation and we expect GBP to trade between 1.2280 and 1.2410 for today.”

Next 1-3 weeks: “We highlighted last Friday (06 May, spot at 1.2370) that GBP could weaken further and support is at 1.2250. GBP dropped to a low of 1.2262 yesterday (09 May) before rebounding. We continue to see risk for a lower GBP even though shorter-term downward momentum has waned somewhat. Overall, GBP has to break clearly below 1.2250 before a move to 1.2200 is likely. On the upside, a breach of 1.2450 (no change in ‘strong resistance’ level from yesterday) would indicate that GBP is not ready to break 1.2250.”