Even without a significant increase in downward momentum, Pound Sterling (GBP) may yet test the major support at 1.3370. In the longer run, GBP could decline to 1.3370, potentially reaching 1.3340, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP may decline to 1.3370, potentially reaching 1.3340

24-HOUR VIEW: "GBP fell to a low of 1.3418 last Thursday. When GBP was at 1.3440 in the early Asian session on Friday, we indicated that 'there is a chance for GBP to retest the 1.3420 level'. However, we pointed out that 'the major support at 1.3400 is unlikely to come under threat'. However, during the NY session, GBP dropped to a low of 1.3393 before closing on a soft note at 1.3402, down by 0.30%. Even without a significant increase in downward momentum, GBP may yet test the major support at 1.3370. A clear break below this level appears unlikely. Resistance levels are at 1.3420 and 1.3440."

1-3 WEEKS VIEW: "In our most recent narrative from last Thursday (08 Jan, spot at 1.3460), we highlighted that 'the downside risk appears to be building'. We also highlighted that 'any GBP weakness is likely part of a lower range of 1.3400/1.3535'. Last Friday, GBP broke below 1.3400, reaching a low of 1.3393. Downward momentum has increased, albeit not significantly. From here, GBP could decline to 1.3370, potentially reaching 1.3340. We will maintain our negative GBP view as long as it holds below the ‘strong resistance’ level, currently at 1.3475."