In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD could slip back to the parity level in the short-term horizon.

Key Quotes

24-hour view: “The sudden and outsized drop in GBP last Friday came as a surprise. GBP continues to decline during early Asian hours as plunged briefly below the record low of 1.0400 before snapping back up. Despite the bounce, GBP is not out of the woods yet. That said, deeply oversold conditions suggest 1.0300 is likely out of reach for now. Resistance wise, 1.0810 is likely strong enough to hold any rebound (minor resistance is at 1.0700).”

Next 1-3 weeks: “Last Friday (23 Sep, spot at 1.1265), we indicated the odds for GBP to decline to 1.1150, 1.1100 have diminished. We clearly did not expect the manner in which GBP nose-dived to 1.0840. GBP continue to accelerate lower today as it took out the 1985 record low of 1.0520. In view of the impulsive downward acceleration, further decline to 1.0000 is not ruled out. On the upside, the ‘strong resistance’ at 1.1000 (level was at 1.1370 last Friday) would indicate that the weakness in GBP has stabilized.”