Pound Sterling (GBP) could retest the 1.3535 level against US Dollar (USD); the major support at 1.3510 is unlikely to come under threat. In the longer run, the likelihood of GBP dropping to 1.3510 is increasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

The likelihood of GBP dropping to 1.3510 is increasing

24-HOUR VIEW: "Subsequent to Wednesday’s quiet price action, we pointed out yesterday (Thursday) that 'momentum indicators are still mostly flat.' We expected GBP to 'trade in a sideways range of 1.3570/1.3635.' Our assessment turned out to be incorrect, as GBP plummeted to a low of 1.3534. The decline, however, was brief, as GBP rebounded swiftly to close largely unchanged at 1.3580 (-0.07%). GBP fell after the close, and today, GBP could retest the 1.3535 level. The current momentum seems to suggest the major support at 1.3510 is unlikely to come under threat. Resistance levels are at 1.3585 and 1.3605."

1-3 WEEKS VIEW: "Last Thursday (03 Jul, spot at 1.3650), we indicated that 'short-term downward momentum is increasing, but it is not strong enough to indicate a sustained decline just yet.' We also highlighted that 'for a continued down-move, GBP must first close below 1.3560.' After GBP fell to a low of 1.3528 on Tuesday and closed at 1.3593, we highlighted two days ago (09 Jul, spot at 1.3590) that 'the likelihood of GBP dropping to 1.3510 is increasing.' We will maintain our view provided that the ‘strong resistance’ at 1.3645 (level was at 1.3680 yesterday) is not breached. Looking ahead, should GBP break clearly below 1.3510, the focus will shift to 1.3465."