FX Strategists at UOB Group noted Cable is likely to accelerate the upside on a breakout of the 1.2740 level in the next weeks.
Key Quotes
24-hour view: “Our expectation for GBP to trade sideways was wrong as it surged to an overnight high of 1.2666 before extending its gain this morning. Momentum remains strong and further GBP strength would not be surprising even though the major resistance at 1.2740 may not be easy to crack (1.2700 is already quite a strong resistance). On the downside, 1.2605 is expected to be strong enough to hold any pull-back (minor support is at 1.2640).”
Next 1-3 weeks: “After trading sideways for several days, GBP lifted off and is currently approaching the top of our expected range of 1.2470/1.2700. In view of the rapid build-up in momentum, a break of 1.2700 would not be surprising. All in, GBP is expected to trade with an upward bias and if it breaks the major 1.2740 level, it could lead to a rapid rise towards the June’s peak at 1.2812. On the downside, a breach of 1.2560 (‘strong support’ level) would indicate our positive view for GBP is wrong.”
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