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A break above 1.2780 should signal the end of the bearish phase in Cable, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP traded between 1.2699 and 1.2753 last Friday, narrower than our expected 1.2690/1.2765 consolidation range. The subsequent strong daily closing in NY (close of 1.2748) suggests further upside pressure even though any up-move is expected to face stiff resistance at 1.2780. For today, a move beyond the next resistance at 1.2810 is not expected. On the downside, only a move below 1.2690 would indicate that the current mild upward pressure has eased (minor support is at 1.2720)”.

Next 1-3 weeks: “We have warned of the increasing risk of an interim low since last Thursday (16 Aug, spot at 1.2700) and continue to hold the same view. However, only a break of 1.2780 would indicate that GBP has found a low at 1.2662 last week. In order for GBP to revive the current flagging momentum, GBP has to break and hold below 1.2690 within these couple of days or a break of the ‘stop-loss’ at 1.2780 would not surprise at all. That said, a break of 1.2780 would only indicate an end to the current bearish phase and not the start of a major bullish reversal”.