The Pound Sterling (GBP) is currently facing oversold conditions, making it susceptible to further declines in the near future. Analysts from UOB Group FX, Quek Ser Leang and Lee Sue Ann, have noted that for GBP to continue weakening, it will need to break the major support level at 1.3210. However, the likelihood of GBP reaching this level today is not high, with another support level at 1.3235 providing some cushion.
In the short term, GBP is experiencing sharp drops and is currently trading at 1.3287, down by 0.67%. Although the currency is in oversold territory, the analysts do not rule out the possibility of further declines. Any rebound is expected to be limited, with resistance levels at 1.3330 and 1.3300. The analysts suggest that GBP is likely to remain below these levels in the near term.
Looking ahead to the next 1-3 weeks, the analysts had previously predicted a range trading phase between 1.3300 and 1.3430. However, the unexpected sharp drop in GBP has led to a reevaluation of the situation. Momentum indicators suggest that GBP is likely to continue weakening, but breaking the major support at 1.3210 is crucial for sustained decline. The analysts believe that the chances of GBP breaking below 1.3210 are high, as long as it remains below 1.3355.
Overall, GBP is currently facing challenges due to oversold conditions and a potential for further declines. Breaking below the major support level at 1.3210 is seen as a key factor for continued weakness in the currency. While the short-term outlook remains uncertain, with limited rebound potential, the long-term view suggests that GBP is likely to continue weakening in the coming weeks.
Investors and traders should closely monitor the price movements of GBP, keeping a close eye on key support and resistance levels. Any significant developments in the market, such as breaking below 1.3210, could signal a potential sustained decline in GBP. With the currency currently in oversold conditions, caution is advised when trading GBP in the near future.
