The Pound Sterling (GBP) could edge lower; any decline is likely limited to a test 1.3050. In the longer run, price action suggests further GBP weakness; the next major support at 1.3000 may not come into view so soon, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Next major support at 1.3000 may not come into view

24-HOUR VIEW: “We expected GBP to trade in a sideways range of 1.3080/1.3180 yesterday. However, it edged lower to 1.3060, closing down by 0.29% at 1.3085. The price action has resulted in a slight increase in momentum. Today, GBP could continue to edge lower, but given the mild momentum, any decline is likely limited to a test of 1.3050. The major support at 1.3000 is unlikely to come into view. Resistance is at 1.3105; a breach of 1.3135 would mean that the current mild downward pressure has faded.”

1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (07 Oct, spot at 1.3130). As indicated, although the recent price action suggests further GBP weakness, conditions are oversold, and the next major support at 1.3000 may not come into so soon. The downside risk will remain intact provided that GBP does not break above 1.3185 (‘strong resistance’ level was at 1.3220 yesterday).”