Pound Sterling (GBP) could rebound further; any advance is likely part of a 1.3290/1.3390 range. In the longer run, downward momentum has slowed somewhat, but there is still a chance for GBP to decline to 1.3200, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum has slowed somewhat

24-HOUR VIEW: "When GBP was at 1.3300 in the early Asian session last Friday, we indicated that it 'could continue to decline despite the oversold conditions.' However, we pointed out that 'it remains to be seen if it can reach 1.3245 today.' We added, 'any recovery is likely to hold below 1.3370.' GBP subsequently dropped to a low of 1.3261 and then rose sharply during the NY session, reaching a high of 1.3370. While GBP could rebound further today, any advance is likely part of a 1.3290/1.3390 range. In other words, EUR is unlikely to break clearly below 1.3290 or above 1.3390."

1-3 WEEKS VIEW: "Last Friday (10 Oct, spot at 1.3300), we highlighted that the sharp decline on Thursday 'has resulted in a marked increase in downward momentum.' We also indicated that 'the next technical target is at 1.3200.' While downward momentum has slowed with the subsequent recovery, there is still a chance for GBP to decline to 1.3200. Overall, only a breach of 1.3410 (no change in ‘strong resistance’ level from last Friday) would suggest that 1.3200 is out of reach."