In opinion of FX Strategists at UOB Group, Cable could edge higher to the mid-1.3200s in the next weeks.
Key Quotes
24-hour view: “Our expectation for GBP to ‘strengthen further’ did not materialize as it gave up some of Wednesday’s strong gains and closed lower at 1.3083 (-0.49%). Indicators are still unwinding from overbought conditions and for today, GBP could drift lower but any weakness is unlikely to extend much below 1.3030 (the next support at 1.2990 is unlikely to come into the picture). Resistance is at 1.3120 followed by 1.3150.”
Next 1-3 weeks: “We have held the view that GBP ‘is likely to trade on a slightly defensive mode with 1.3050 acting as a strong resistance’ since last Friday (16 Oct). After trading in a quiet manner for a few days, GBP took off, blew past 1.3050 and hit a high of 1.3177 yesterday (21 Oct) before closing higher by a whopping +1.54% (its biggest 1-day gain in 7 months). While the rapid rally appears to be running ahead of itself, upward momentum has clearly improved. From here, there is room for further GBP strength towards 1.3250 but it is left to be seen if GBP can maintain a foothold above this level. Support is at 1.3050 but only a break of 1.2990 would indicate that GBP is not ready for 1.3250 just yet.”
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