Increase in momentum suggests further Pound Sterling (GBP) weakness; the major support at 1.2780 is unlikely to come into view for now, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

The major support at 1.2780

24-HOUR VIEW: “We noted yesterday that GBP ‘is under mild downward pressure.’ We expected it to drift lower, but we held the view that ‘any decline is unlikely to reach 1.2850.’ GBP subsequently declined more than expected, reaching a low of 1.2850 in late NY trade. While the increase in momentum suggests further GBP weakness, the major support at 1.2780 is unlikely to come into view today (there is another support level at 1.2820). To keep the momentum going, GBP must stay below 1.2895 with minor resistance at 1.2875.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Friday (19 Jul, spot at 1.2950), wherein GBP ‘appears to have entered a consolidation phase, and it is likely to trade between 1.2850 and 1.3020 for the time being.’ Yesterday, GBP fell and tested the bottom of our expected range at 1.2850. Downward momentum is beginning to build, but at this time, it is premature to expect a significant decline. Overall, provided that the ‘strong resistance’ (level currently at 1.2920) is not breached, GBP is expected to trade with a downward bias towards 1.2780.”