Oversold decline has not stabilised; the Pound Sterling (GBP) could decline further to 1.2940. The major support at 1.2890 is not expected to come under threat. In the longer run, the breach of the major support at 1.3000 sets the stage for further losses; the levels to monitor are 1.2940 and 1.2900, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Levels to monitor are 1.2940 and 1.2900

24-HOUR VIEW: “We expected GBP to trade sideways yesterday. However, during early London trading, GBP sold off sharply, plummeting and breaking below the major support at 1.3000 (low has been 1.2977). Inevitably, after such a sharp and swift sell-off, conditions are oversold. That said, the decline has not stabilised. Today, GBP could decline further to 1.2940. The major support at 1.2890 is not expected to come under threat. On the upside, any intraday rebound is expected to face solid resistance at 1.3035 (minor resistance is at 1.3010).”

1-3 WEEKS VIEW: “We turned negative in GBP early this month. As we tracked the decline, in our latest narrative from last Friday (11 Oct, spot at 1.3060), we indicated that ‘there has been no further increase in downward momentum’. However, we pointed out, ‘only a breach of 1.3125 (‘strong resistance’ level) would suggest that 1.3000 is out of reach this time around.’ GBP traded sideways for a few days until yesterday, when it plummeted and broke below 1.3000. The breach of the major support at 1.3000 sets the stage for further losses. The levels to monitor are 1.2940 and 1.2890. On the upside, the ‘strong resistance’ level has moved lower to 1.3080 from 1.3125.”