In opinion of FX Strategists at UOB Group, Cable could likely move into a consolidation phase in the next weeks.
Key Quotes
24-hour view: “While we held the view “a sustained decline below 1.2800 seems unlikely”, we do not expect the subsequent strong surge higher in GBP. While over-extended, upward momentum is still strong and the current rally could extend further to 1.3080. The next resistance at 1.3130 is likely out of reach for now. Support is at 1.2950 followed by 1.2900″.
Next 1-3 weeks: “Brexit optimism sent GBP rocketing and our caution yesterday that “the risk of a break of 1.2800 has increased” appears to be premature. In other words, the current price action is still viewed as part of a broad consolidation range, likely within the 1.2800/1.3080 range indicated on Monday (12 Nov, spot at 1.2935). Looking forward, the outlook for GBP is unclear and a lot will obviously hinge on the outcome of Brexit. For the next several weeks/months, GBP could continue to whipsaw and only a break below the August’s low near 1.2660 or above the September’s peak near 1.3300 would suggest the start of a more sustained and directional move”.
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