The Pound Sterling (GBP) could continue to decline; oversold weakness suggest it is unlikely to threaten the support at 1.3250. In the longer run, more than week-long GBP strength has ended; it is likely to trade in a 1.3200/1.3430 range for the time being, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

Likely to trade in a 1.3200/1.3430

24-HOUR VIEW: “We were of the view that GBP ‘could rise and potentially reach 1.3450’ yesterday. However, after rising to 1.3430, GBP fell and broke below a few support levels, reaching a low of 1.3314. While GBP could continue to decline today, oversold conditions suggest that any weakness is unlikely to threaten the support at 1.3250 (minor support is at 1.3290). On the upside, resistance levels are at 1.3360 and 1.3390.”

1-3 WEEKS VIEW: “Last Tuesday (17 Sep, spot at 1.3210), we indicated that ‘increase in momentum is likely to lead to further GBP strength.’ As GBP subsequently rose, we tracked the advance, and yesterday (25 Sep, spot at 1.3420) we indicated that ‘the boost in momentum indicates further GBP strength is likely, and the next level to watch is 1.3480.’ GBP then rose to 1.3430 and then fell sharply, breaking below our ‘strong support’ level at 1.3330. The breach of the ‘strong support’ level, combined with an ‘outside reversal day’ indicates that GBP strength has ended. The current price movements are likely the early stages of a range trading phase. In other words, we expect GBP to trade in a range for the time being, likely between 1.3200 and 1.3430.”