Pound Sterling (GBP) could decline further; deeply oversold conditions suggest it is unlikely to break below 1.3000. In the longer run, there is room for GBP to test the significant support level at 1.3000, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP to test the significant support level at 1.3000

24-HOUR VIEW: "We did not anticipate the sharp drop in GBP that sent it to a low of 1.3043 (we had expected range-trading). While GBP could decline further, deeply oversold conditions suggest it is unlikely to break below the major support at 1.3000 (there is another support level at 1.3030). Resistance is at 1.3085; a breach of 1.3105 would indicate that the weakness in GBP is stabilising."

1-3 WEEKS VIEW: "Last Friday (14 Nov, spot at 1.3160), we were of the view that GBP 'could test 1.3240'. In our most recent narrative from two days ago (18 Nov, spot at 1.3150), we highlighted that 'the buildup in upward momentum is starting to slow, and a breach of 1.3105 (‘strong support’ level) would indicate that GBP is more likely to range-trade rather than head higher to test 1.3240'. Yesterday, in a sudden move, GBP plummeted to a low of 1.3043. There has been a rapid increase in downward momentum, and there is room for GBP to test the significant support level at 1.3000. To keep the momentum going, GBP must hold below 1.3150 (‘strong resistance’ level)."