GBP/USD still bearish, targets 1.3540 – UOB

Cable remains bearish and could grind lower to the 1.3540 region, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “The ‘target’ indicated at 1.3540 yesterday was not met as GBP only managed to touch a low of 1.3555 during late NY hours. While downward momentum is waning, we continue to see chance for a test of 1.3540. For today, a sustained break below this level seems unlikely (next support is at 1.3500). Resistance is at 1.3625 but the stronger level is at 1.3660”.

Next 1-3 weeks: “we expected GBP to “grind lower” to 1.3850. The price action since then is anything but ‘grinding’ as GBP sliced through several strong support levels with ease and plunged to a low of 1.3588 yesterday. The outsized decline appears to be running ahead of itself but with no sign of stabilization just yet, further weakness would not be surprising. That said, it is unlikely that GBP could maintain its current torrid pace of decline. From here, the next level to aim for is at 1.3540. This is a rather strong level and could temporarily check the decline in GBP. A break of this level would open up the way for a move to the year-to-date low at 1.3458. Resistance is at 1.3680 but only a break of the ‘stop-loss’ level at 1.3750 would indicate that a short-term low is in place”.