Further downside in GBP/USD is likely, although there is a tough support around 1.3250, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our view from yesterday where ‘the risk has shifted to the downside’ was incorrect as GBP rebounded and recovered most of its initial steep drop and closed largely unchanged at 1.3421 (+0.07%). The rebound has scope to extend but a clear break of 1.3460 appears unlikely. The major resistance at 1.3505 is not expected to come into the picture. On the downside, a breach of 1.3360 (minor support is at 1.3390) would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “After GBP plunged to a low of 1.3273, we highlighted last Friday (25 Feb, spot 1.3380) that further GBP weakness is not ruled out. However, we noted that there is a major support at 1.3250. For now, we continue to see chance for GBP to head lower and only a breach of 1.3505 (no change in ‘strong resistance’ level) would indicate that the current weakness has stabilized.”