UOB’s Quek Ser Leang and Lee Sue Ann report that GBP/USD suffered a sharp slide to the low 1.33s after briefly trading above 1.3480. Intraday, they see scope for a test of 1.3300, though a sustained break below is doubtful. Over 1–3 weeks, a clear move under 1.3300 would open downside toward 1.3240, while resistance is seen near 1.3390/1.3410.

Sterling pressured toward key floor

"24-HOUR VIEW: When GBP was at 1.3425 last Friday, we highlighted that “while GBP could test 1.3405, given that there is no clear increase in downward momentum, any further decline is unlikely to break below 1.3390.” We noted that “resistance levels are at 1.3440 and 1.3455.” However, GBP rose to 1.3483 first before plunging to 1.3332. While the sharp decline appears excessive, there is scope for GBP to test 1.3300 before stabilisation can be expected. A break below this level is not ruled out, but deeply oversold conditions suggest GBP might not be able to maintain a foothold below this level. On the upside, resistance levels are at 1.3360 and 1.3390."

"1-3 WEEKS VIEW: Last Tuesday (02 Jun, spot at 1.3460), we highlighted that “the current price movements are likely part of a range-trading phase between 1.3390 and 1.3510.” After GBP dropped to a low of 1.3412, in our most recent narrative from last Thursday (04 Jun, spot at 1.3430), we indicated that “as long as GBP holds below 1.3470 (‘strong resistance’ level), the risk of GBP breaking below 1.3390 will increase over the next few days.” On Friday, GBP rose above 1.3470, printing a high of 1.3483. While our ‘strong resistance’ level failed to cap the advance, the subsequent plunge well below 1.3390 (low was 1.3332) highlights the prevailing GBP weakness. That said, GBP must break clearly below 1.3300 before further declines toward 1.3240 can be expected. To sustain the downward momentum, GBP must hold below 1.3410."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)