Cable’s downside momentum could break below the 1.2200 support in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “While we expected GBP to weaken yesterday, we were of the view that ‘the chance for a break of the major support at 1.2250 is not high’. GBP subsequently popped to a high of 1.2400 before dropping below 1.2250 (low of 1.2238). Downward momentum is building quickly and a break of 1.2200 would not be surprising. That said, the next support at 1.2140 is likely out of reach for now. The downward pressure is intact as long as GBP does not move above 1.2320 (minor resistance is at 1.2280).”

Next 1-3 weeks: “We have expected a weaker GBP since last Friday (06 May, spot at 1.2370). As GBP declined, in our latest narrative from Tuesday (10 May, spot at 1.2325), we highlighted that the risk for GBP is still on the downside but GBP has to break 1.2250 before a move to 1.2200 is likely. GBP cracked 1.2250 yesterday and the improved downward momentum suggests that it could breach 1.2200 as well. The next support is at 1.2140. Overall, only a break of 1.2380 (‘strong resistance’ level was at 1.2420 yesterday) would indicate that the current weakness has stabilized.”