In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further downside in cable could revisit the 1.2400 region in the next weeks.

Key Quotes

24-hour view: “The sharp drop in GBP to a low of 1.2459 came as a surprise (we were expecting GBP to consolidate). While the rapid decline is deeply oversold, the weakness in GBP could extend below 1.2450 before stabilization is likely. The major support at 1.2405 is unlikely to come into the picture. Resistance is at 1.2510 followed by 1.2540.”

Next 1-3 weeks: “We highlighted yesterday (01 Jun, spot at 1.2610) that upward momentum has more or less dissipated and we expected GBP to consolidate and trade between 1.2530 and 1.2670. We did not expect the sharp sell-off that sent GBP to a low of 1.2459. The rapid improvement in downward momentum suggests GBP is likely to weaken towards 1.2405. At this stage, the chance for a sustained decline below this level is not high. On the upside, a breach of the ‘strong resistance’ level, currently at 1.2570, would indicate that GBP is not ready to head lower.”