Pound Sterling (GBP) could retest the 1.3430 support level; a sustained break below this level is unlikely. The next support at 1.3365 is also unlikely to come under threat for now. In the longer run, boost in downward momentum could lead to GBP declining toward 1.3365, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Boost in downward momentum might lead to GBP declining

24-HOUR VIEW: "Our view for GBP to 'trade in a sideways range of 1.3485/1.3540' yesterday was incorrect, as GBP plummeted to a low of 1.3427. The sharp drop appears excessive, but with no sign of stabilisation just yet, GBP could retest the 1.3430 support level. Based on the oversold momentum, a sustained break below this level is unlikely. The next major support at 1.3365 is also unlikely to come under threat for now. Resistance is at 1.3475; a breach of 1.3500 would indicate that the weakness is stabilising."

1-3 WEEKS VIEW: "We have held a slightly negative GBP view since last Friday (see annotations in the chart below). In our latest narrative from Monday (22 September, spot at 1.3470), we highlighted that GBP 'must first break and hold below 1.3430 before a move toward 1.3365 can be expected.' After GBP struggled to extend its decline, we highlighted the following yesterday (24 Sep, spot at 1.3520): 'Since then, GBP has not been able to make further headway on the downside, and downward momentum is beginning to fade. However, there is still a chance, albeit not a high one, for GBP to test 1.3430. That said, this has to happen soon, or a break above 1.3565 (‘strong resistance’ level) would indicate that GBP remains in a range-trading phase.' GBP did not break 1.3565, as it plummeted to a low of 1.3427. Downward momentum received a boost, and this could lead to a decline toward 1.3365. On the upside, the ‘strong resistance’ is now at 1.3520 instead of 1.3565."