There is a chance for Pound Sterling (GBP) to retest the 1.3120 level; the major support at 1.3100 is unlikely to come into view. GBP is still negative, but it remains to be seen if 1.3100 is within reach during this phase of weakness, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is still trading negative

24-HOUR VIEW: "GBP dropped sharply for the second straight day on Wednesday before rebounding sharply. Yesterday, we stated that “the rebound from oversold conditions suggests that GBP is unlikely to weaken much further.” We were of the view that GBP “is more likely to consolidate between 1.3140 and 1.3245.” We were incorrect, as GBP fell further to a low of 1.3117. Although conditions are still oversold, there is a chance for GBP to retest the 1.3120 level before a recovery can be expected. The major support at 1.3100 is unlikely to come into view. On the upside, if GBP breaks above 1.3200 (minor resistance is at 1.3175), it would mean that it is not declining further."

1-3 WEEKS VIEW: "We have held a negative GBP view since early last week. Yesterday (30 Oct, spot at 1.3195), we highlighted that GBP 'is still negative'. However, we pointed out that 'it remains to be seen if the next technical target at 1.3100 is within reach during this phase of weakness'. Although GBP subsequently dropped further to 1.3117, short-term conditions are deeply oversold, and it remains to be seen if 1.3100 is within reach. We will maintain our negative outlook as long as GBP holds below 1.3245 (‘strong resistance’ level was at 1.3285 yesterday)."