Cable still faces downside risks in the short-term horizon, suggested FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that GBP ‘could dip towards the 1.3260 support first before a stronger recovery can be expected’. We added, ‘a sustained decline below 1.3260 appears unlikely’. GBP subsequently dropped to a low of 1.3244 but the anticipated recovery did not materialize. Downward pressure is beginning to build up and the bias for GBP today is on the downside. That said, a clear break of the major support at 1.3200 appears unlikely (minor support is at 1.3230). On the upside, a breach of 1.3330 would indicate the current downward pressure has eased (minor resistance is at 1.3295).”
Next 1-3 weeks: “The positive phase in GBP that started earlier this week ended quickly as GBP broke below our ‘strong support’ level at 1.3260 yesterday (low of 1.3244). The outlook is mixed now and GBP could trade between the 1.3150 and 1.3400 for a while.”