According to the currency strategists at UOB Group, GBP / USD decline could extend to the 1.3750 region on the short-term horizon.
Key Comments:
24 hour view: “Last Friday we expected GBP / USD to ‘retest the 1.3980 level first before a more substantial pullback could be expected.’ Our view was wrong as GBP / USD tumbled down and broke through various support levels with ease (the low was 1.3803). The quick and sharp decline appears to be ahead of itself, but there are no signs of stabilizing yet. From here, GBP / USD could test support at 1.3790 first before stabilization can be expected. The next support at 1.3750 is probably ‘safe’ for today. Resistance is at 1.3845 followed by 1.3870 “.
Next 1-3 weeks: “Our view last Thursday (Apr 29, GBP / USD at 1.3950) where GBP / USD is expected to ‘trade bullish towards 1.4010’ has been shown to be incorrect as GBP / USD fell below from our ‘strong support’ level at 1.3850 on Friday (1.3803 low). The sudden and sharp drop has room to extend to 1.3750. At this time, a sustained decline below this level appears unlikely. The current downside bias in GBP / USD is considered intact unless the pair can move above the ‘strong resistance’ level at 1.3910 “.
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