GBP/USD eyes a potential test of 1.3000 – UOB

FX Strategists at UOB Group remain bearish on Cable, expecting a probable visit to the 1.3000 handle in the near term.

Key Quotes

24-hour view: “The anticipated weakness in GBP exceeded the target indicated at 1.3060 last Friday but the down-move was short-lived (low of 1.3027). The quick rebound from the low extended higher early this morning to a high of 1.3150. The subsequent sharp and rapid drop from the high has resulted in a mixed outlook and further choppy trading seems likely. Expected range for today; 1.3040/1.3130”.

Next 1-3 weeks: “We just shifted to a bearish stance last Friday (06 Oct) and there is no change to the view. As highlighted, while the recent decline in GBP has been rather rapid, there is room for further weakness towards the next support at 1.3000 (low has been 1.3027 during NY session on Friday). On the upside, only a move back above 1.3200 (stop-loss adjusted lower from 1.3250) would indicate that a temporary low is in place. Positioning wise, the sell level suggested at 1.3170/75 was not met and it appears that we have missed the ideal selling opportunity”.