FX Strategists at UOB Group noted GBP/USD could still breach 1.3000 and extend the drop to the 1.2900 region in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that ‘while GBP could still edge below 1.3000, waning downward momentum coupled with oversold conditions suggests that a sustained decline is unlikely’. Our expectations did not materialize as GBP rebounded to 1.3089 before easing off to close at 1.3045 (+0.33%). Downward momentum has eased and GBP is likely to consolidate from here, expected to be within a range of 1.3000/1.3100.”

Next 1-3 weeks: “On Monday (14 Mar, spot at 1.3045), we highlighted that GBP could breach 1.3000 and if it can close below this support, it is likely to trigger further weakness to 1.2900. GBP briefly touched 1.3000 during early Asian hours yesterday before rebounding. While shorter-term downward momentum is beginning to wane, a breach of 1.3000 is not ruled out just yet. Only a break of the ‘strong resistance’ at 1.3140 (no change in level from yesterday) would indicate that the weak phase in GBP that started more than 2 weeks ago has come to an end.”