The pair GBP / USD faces a possible move to the 1.3670 level in the short term, suggest currency strategists at UOB Group.
Key Comments:
24 hour view: “Although we expected GBP / USDD to weaken yesterday, we are of the opinion that ‘the next support at 1.3750 is unlikely to be threatened.’ The ease with which GBP / USD plunged through 1.3750 was a surprise (low of the previous day at 1.3725). The rapid decline has pushed the pair into oversold territory, but a strong downside momentum could lead to a test of 1.3700. For today, the March low near 1.3670 is likely out of reach. On the upside, a breakout of 1.3800 (minor resistance is at 1.3770) would indicate that current weakness has stabilized. ”
Next 1-3 weeks: “Yesterday (Apr 7, GBP / USD at 1.3830), we highlighted that the ‘outlook is mixed’ and we expected GBP / USDD to ‘trade between 1.3750 and 1.3950’. However, the British pound easily broke at 1.3750 and fell to 1.3725. While the two consecutive days of sharp decline seem overblown, there is room for GBP / USD to test last month’s low near 1.3670. At this time, the outlook for a sustained decline below this level is not high. In general, the current downward pressure is considered intact as long as the British pound does not move above 1.3840 ”.
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