In light of the recent price action, Cable could have moved to a consolidation phase, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “We expected GBP to strengthen yesterday and held the view that ‘a break of the strong resistance at 1.2650 would not be surprising; a move beyond 1.2710 would come as a surprise’. Our expectation was not wrong as GBP topped out at 1.2682. However, the swift decline during NY hours was not exactly expected (GBP dropped to an overnight low of 1.2553). From here, the soft underlying tone suggests GBP could drift lower towards 1.2530. Barring a sudden pick-up in momentum, the next support at 1.2500 is likely out of reach. Resistance is at 1.2615 followed by 1.2650.”
Next 1-3 weeks: “Yesterday (16 Jun, spot at 1.2625), we highlighted that ‘the odds for a deeper pull-back in GBP have diminished considerably’. The subsequent breach of the ‘strong resistance’ level at 1.2650 indicates that GBP has moved into a consolidation phase. From here, GBP is expected to trade between 1.2420 and 1.2710 for a period.”
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