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In opinion of FX Strategists at UOB Group, a probable drop in Cable to the 1.2700 neighbourhood seems to have lost some traction as of late.

Key Quotes

24-hour view: “GBP traded between 1.2740 and 1.2850 yesterday, close to our expected sideway-trading range of 1.2735/1.2855. The movement is still viewed as a consolidation phase even though the slightly weakened underlying tone suggests GBP is likely to trade at a lower range of 1.2720/1.2820.”

Next 1-3 weeks: “While we indicated last Friday that a ‘NY close below 1.2820 would suggest GBP is ready to embark of a sustained decline’, we were of the view ‘the prospect for such a scenario is low for now’. However, GBP sliced through 1.2820 and plunged to a 4-1/2 -month low of 1.2726 before snapping back up to end the day at 1.2821 (-0.48%). The break of 1.2820 has exposed the downside in GBP even though 1.2700 is a strong support and may not come into the picture so soon. To look at it another way, GBP could consolidate for a couple of days first before making a run for 1.2700. On the upside, only a move above 1.2900 (‘strong resistance’ level) would indicate that GBP is not ready to move lower just yet.”