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Cable could re-visit the 1.2500 area on a close below 1.2570, suggested FX Strategists at UOB Group.

Key Quotes

“We highlighted yesterday that GBP “could dip below 1.2570 but 1.2540 is likely out of reach”. GBP subsequently dipped to 1.2557 before recovering slightly. While downward pressure has waned considerably, it is too soon to expect a sustained rebound. GBP is more likely to consolidate and trade sideways at these lower levels. Expected range for today, 1.2555/1.2605″.

Next 1-3 weeks: “We indicated yesterday that GBP has moved into a ‘sideway-trading phase’ even though the weakened underlying tone suggests it would likely “probe the bottom” of the expected 1.2570/1.2725 range first. However, the pace of which GBP moved towards the bottom of the range was faster than anticipated as it plummeted to an overnight low of 1.2584. From here, if GBP were to close below 1.2570 in NY, it would suggest the June’s low of 1.2507 would come under pressure. As downward momentum has not improved by all that much, the prospect for such a scenario is not high for now but it would continue to increase unless GBP can move back above the strong resistance at 1.2670 within these few days”.