Cable stays neutral and should keep trading sideways for the time being, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “We expected GBP to trade sideways within a 1.3185/1.3260 range last Friday. While GBP tested the top of the range with a high of 1.3259, the subsequent sharp sell-off came as a surprise (low of 1.3148 last Friday). GBP extended its decline upon opening this morning and hit a low of 1.3080. The rapid drop is running ahead of itself and while a dip below 1.3080 would not be surprising, a sustained move below 1.3055 is not expected (next support is at 1.3025). On the upside, only a break back above 1.3175 would indicate that the current downward pressure has eased (minor resistance is at 1.3150)”.
Next 1-3 weeks: “GBP eked out a fresh 3-week high of 1.3259 last Friday before plummeting to close sharply lower (NY close of 1.3152, -0.62%). Brexit headlines earlier this morning sent it tumbling further to a low of 1.3080. The break of the 1.3130 ‘key support’ indicates that last Friday’s 1.3259 high is a short-term top. While there is no change to the overall neutral outlook, the recent upward pressure has eased and GBP is expected to trade sideways to lower in the coming days, likely between 1.3000 and 1.3220 (we previously held the view GBP could extend its advance to 1.3295)”.
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