GBP: Expected to Weaken Further Toward 1.3410 vs USD — UOB

UOB analyst Quek Ser Leang said in the latest report that GBP/USD briefly broke below the 1.3475 level before rebounding, and is currently trading around 1.34916. He noted that downside momentum is building, and expects the pound to have further room to weaken.

**Short-term range trading, downside pressure accumulating**

Quek believes the intraday trading range is expected to be between 1.3470 and 1.3520. Although momentum indicators show bearish forces are building, he also noted that the major support level at 1.3410 may not be tested immediately, suggesting the decline could unfold gradually. Earlier, GBP/USD briefly broke above 1.3480 before sharply sliding to the 1.33 low area, indicating heavy selling pressure above.

**Interplay of dollar strength and domestic political factors**

The dollar continues to be supported by expectations of Fed tightening, exerting external pressure on the pound. Meanwhile, domestic political factors in the UK cannot be ignored, with the incoming prime minister expected to take office officially next week. Amid the government transition, the pound shows signs of being overvalued in the short term, viewed by the market as a potential risk. However, some institutions maintain a positive view on the pound's medium-term trajectory, supported by a relatively attractive carry advantage.

**Focus on key support effectiveness**

On the technical front, if the 1.3470 level gives way, GBP/USD could seek further support lower. UOB previously mentioned 1.3300 as a key support level, but whether current downside momentum is sufficient to push the pair toward that level remains to be seen. The market will closely monitor subsequent comments from Fed officials and UK political developments to gauge the pair's short-term direction.