Pound Sterling (GBP) could test the 1.3295 level; a sustained drop below this level is unlikely. In the longe run, for a continued decline, GBP must first close below 1.3295, OCBC's FX analysts Frances Cheung and Christopher Wong note.

A sustained drop below 1.3295 is unlikely

24-HOUR VIEW: "GBP dropped to a low of 1.3307 two days ago and then rebounded. In the early Asian session yesterday, when GBP was at 1.3355, we noted that 'downward momentum has eased with the rebound.' We expected GBP to “trade in a sideways range of 1.3330/1.3380.” We were incorrect, as GBP fell to a low of 1.3309. Downward momentum has increased, albeit not much. Today, GBP could test the 1.3295 level. Based on the current momentum, a sustained drop below this level is unlikely. Resistance levels are at 1.3345 and 1.3365."

1-3 WEEKS VIEW: "We highlighted two days ago (22 Oct, spot at 1.3370) that 'downward momentum has increased slightly, but rather than a continued decline, GBP is likely to edge lower within a lower range of 1.3310/1.3435.' We also highlighted that GBP 'is unlikely to break clearly below 1.3310.' GBP then tested the 1.3310 level twice, as it dipped to a low of 1.3307 two days ago, and to 1.3309 yesterday. Downward momentum has increased further, but for a continued decline, GBP must first close below 1.3295. The probability of GBP closing below 1.3295 will remain intact as long as the ‘strong resistance’ level, currently at 1.3385, is not breached. Looking ahead, the next level to watch below 1.3295 is 1.3250."