There is a chance for GBP to break below 1.3000; given the deeply oversold conditions, any further decline is unlikely to reach 1.2960. In the longer run, GBP is still negative, but further downside may be limited. The next level to monitor is 1.2960, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Further downside may be limited

24-HOUR VIEW: "The sharp drop in GBP that sent it plunging to a low of 1.3012 was surprising (we had expected range-trading). While the decline seems excessive, there is no sign of stabilisation just yet. Today, there is a chance for GBP to break below 1.3000, but given the deeply oversold conditions, any further decline is unlikely to reach the next support at 1.2960. Resistance is at 1.3045; a breach of 1.3070 would indicate that GBP is unlikely to weaken further."

1-3 WEEKS VIEW: "We turned negative on GBP two weeks ago. After GBP dropped below our previous technical objective at 1.3100 (low of 1.3097), we indicated two days ago (03 Nov, spot at 1.3140) that 'while the outlook for GBP remains negative, for GBP to continue to decline, it must first close below 1.3100'. Yesterday, GBP broke 1.3100 and plunged to a low of 1.3012, closing sharply lower by 0.89% at 1.3020. Although we maintain a negative outlook on GBP, the outsized drop over the past couple of weeks suggests that further downside from here may be limited. The next level to monitor is 1.2960. On the upside, if GBP breaks above 1.3120 (‘strong resistance’ level previously at 1.3205), it would mean that GBP is not weakening further."