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Occasional weakness in Cable should be seen as part of a broader 1.3580-1.3760 range, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further weakness towards 1.3615 appears likely’. We added, ‘there is a relatively strong support at 1.3635’. While GBP dropped to 1.3631, the subsequent sharp bounce came as a surprise (overnight high of 1.3745). The rapid recovery has scope to extend but overbought conditions suggest that any advance is unlikely to move clearly above the major resistance at 1.3760. Support is at 1.3700 and a break of 1.3670 would indicate the current upward pressure has eased.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (28 Jan, spot at 1.3665). As highlighted, ‘the bias is tilted to the downside but any weakness is viewed as part of a 1.3580/1.3760 range’. While we did not quite anticipate the sharp overnight bounce, the risk still appears to be tilted to the downside. A break of 1.3760 is not ruled out but GBP has to close above the next major resistance at 1.3800 before a sustained advance can be expected.”