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GBP/USD now shifted the attention to the 1.3060 level in the near term, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘the major support at 1.3100 is unlikely to come under threat’. The anticipated weakness exceeded our expectations as GBP cracked 1.3100 and plummeted to 1.3066. The sharp and rapid decline appears to be overdone and GBP is unlikely to weaken much further. For today, GBP is more likely to trade sideways within a range of 1.3060/1.3140.”
Next 1-3 weeks: “Last Friday (25 Mar, spot at 1.3195), we highlighted that GBP appears to have moved into a consolidation phase and is likely to trade between 1.3100 and 1.3300. GBP dropped below 1.3100 yesterday (low of 1.3066) before rebounding quickly. Downward momentum has improved, albeit not by all that much. From here, GBP has to close below 1.3050 before a sustained decline is likely. The chance for GBP to close below 1.3050 is not high for now but it would remain intact as long as GBP does not move above 1.3195 (‘strong resistance’ level) within these few days. Looking ahead, the next support below 1.3050 is at 1.3000.”