According to FX Strategists at UOB Group, Cable should move into a positive phase on a close above 1.2763.
Key Quotes
24-hour view: “Expectation for GBP to “dip below 1.2650″ was incorrect as it rebounded strongly from 1.2665 and touched 1.2735 during NY hours last Friday. Despite the pull-back from the high, the underlying tone has improved and from here, a retest of the 1.2735 high would not be surprising. That said, last week’s peak at 1.2784 is unlikely to come into the picture. Support is at 1.2675 followed by the still rather strong level of 1.2650″.
Next 1-3 weeks: “We highlighted last Friday (28 Jun, spot at 1.2675) that “upward momentum has been dented” but added, “until there is a break of the strong support at 1.2650, the outlook for GBP still appears to be slightly positive”. Despite our reservation, 1.2650 continues to hold as GBP rebounded from 1.2665. Despite the rebound, upward momentum has not improved by that much and we are back to the scenario (as from 24 June, spot at 1.2745) wherein only “a NY closing above 1.2763 would indicate start of a ‘positive phase'”. We will continue to hold the same view for now but GBP has to get ‘cracking’ soon or the current lackluster upward momentum would deteriorate quickly”.
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