As long as the Pound Sterling (GBP) remains below 1.2600, it could test the 1.2505 level; last Friday’s low of 1.2475 is unlikely to come under threat. In the longer run, sharp drop appears to be overextended; any further decline may find it difficult to break below 1.2475, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Last Friday’s low of 1.2475 is unlikely to come under threat

24-HOUR VIEW: “We highlighted yesterday that “while upward momentum has not increased much, there is scope for it to rise to 1.2625 before levelling off.” We added, “the strong resistance at 1.2650 is unlikely to come into view.” However, GBP rose less than expected to 1.2613 in early NY trade, before easing off to trade sideways for the remaining session. GBP closed at 1.2570 (+0.28%), but fell in early Asian trade today. Despite the decline, downward momentum has not increased much. That said, as long as GBP remains below 1.2600 (minor resistance is at 1.2575), it could test the 1.2505 support. Last Friday’s low of 1.2475 is unlikely to come under threat.”

1-3 WEEKS VIEW: “Yesterday (25 Nov), when GBP was at 1.2590, we highlighted that last Friday’s “sharp drop appears to be overextended.” We pointed out, “any further decline may find it difficult to break last Friday’s low of 1.2475, which is serving as a significant support level.” Our view remains unchanged. Overall, only a breach of 1.2650 (no change in ‘strong resistance’ level) would mean that the weakness in GBP from two weeks ago has stabilised.”