Despite oversold conditions, the pound sterling (GBP) may fall further; the probability that it will reach 1.3210 today is not high. Longer term, to continue weakening, GBP needs to break the major support at 1.3210, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

GBP needs to break below 1.3210 to continue falling

24-HOUR VIEW: “We predicted a sharp decline in sterling, which sent it to a low of 1.3237. GBP then closed weakly at 1.3287, down 0.67%. A sharp decline indicates a serious oversold, but further declines are not ruled out. However, given oversold conditions, the likelihood of GBP reaching the major support at 1.3210 today is not high (next support is at 1.3235). On the downside, any rebound is likely to remain below 1.3330 with minor resistance at 1.3300.”

1-3 WEEK VIEW: “Yesterday (October 1, spot at 1.3375) we indicated that “the current price movements are likely part of a range trading phase, likely between 1.3300 and 1.3430.” We certainly didn’t expect the keen decline that saw GBP hit a low of 1.3237. While increased momentum suggests that sterling is likely to continue to weaken, it needs to break the major support at 1.3210 before further sustained decline is likely. The chance of GBP breaking clearly below 1.3210 seems high, provided it stays below 1.3355.”