Cable could advance further and test the mid-1.3100s in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “The sudden and sharp burst higher in GBP yesterday was clearly unexpected. The rally is running too fast, too soon but there is scope for a move to 1.3070 first before GBP should settle down. For today, the prospect for a clear break of the next resistance at 1.3110 is not high. On the downside, support is at 1.2980 followed by 1.2950″.
Next 1-3 weeks: “We noted yesterday that further out, “it appears the current consolidation would be resolved by a break above 1.2960 but this is unlikely to happen so soon”. The break of 1.2960 happened way sooner than anticipated as GBP rocketed to a high of 1.3033 (after Barnier’s comments). Despite the strong surge, we are not ready to adopt a bullish stance just yet. That said, after the outsized rally, the pressure is clearly on the upside and we see room for further GBP strength to 1.3150. At this stage, the prospect for a clear break above this level is not high but it would continue to improve as long as GBP can hold above the ‘key support’ at 1.2930″.
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