In the opinion of FX Strategists at UOB Group, Cable could have charted an interim top in the 1.3200 area.

24-hour view: We highlighted yesterday that GBP ‘could dip towards 1.2840 but is unlikely to challenge the next support at 1.2800’. In line with expectation, GBP dropped to a low of 1.2805 during late NY hours before closing on a weak note at 1.2815. Downward momentum has increased and from here, GBP is expected to weaken further to 1.2755. The next support is further down at 1.2726 is unlikely to come into the picture. Resistance wise, 1.2890 is likely strong enough to cap any intraday recovery (minor resistance is at 1.2850).

Next 1-3 weeks: While we highlighted yesterday (10 Mar, spot at 1.3080) that the ‘prospect for a sustained advance above 1.3200 is not high’, we held the view that the ‘severely overbought short-term conditions could lead to a couple of days of consolidation’. Instead of consolidating, GBP plunged to an overnight low of 1.2884. The break of our strong support at 1.2960 indicates that 1.3200 is likely a short-term top. From here, the rapid pull-back has scope to extend lower but at this stage, the late February’s low of 1.2726 is likely out of reach. All in, GBP is expected to stay under pressure from here unless it can move and stay above 1.3080 within these few days.