GBP/USD risks a deeper decline to the 1.1300 region once 1.1400 is cleared, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Our expectations for GBP to ‘trade sideways within a range of 1.1500/1.1600’ were incorrect as GBP dropped to a low 1.1461 during NY session. Downward momentum is building quickly and GBP is likely to weaken further. That said, 1.1400 is a solid support and it is left seen if GBP can break this level today. Resistance is a 1.1495 followed by 1.1525.”

Next 1-3 weeks: “Two days ago (14 Sep, spot at 1.1510), we indicated that while GBP is likely to stay under pressure, the chance for a break of the major support at 1.1400 is not high. GBP dropped to 1.1461 yesterday and downward momentum is improving and the risk of a break of 1.1400 has increased. A break of the solid support could potentially trigger a rapid sell-off as there is no significant support until 1.1300. On the upside, a breach of 1.1590 (‘strong resistance’ level was at 1.1630 yesterday) would indicate that the current weakness in GBP has stabilized.”