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Cable’s rebound could likely reach the 1.3890 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We did not anticipate the short-lived drop in GBP to 1.3717 and the subsequent strong surge to 1.3850. While the rapid bounce appears to be running ahead of itself, there is room for the advance to test 1.3865 first before easing. The next resistance at 1.3900 is not expected to come into the picture. Support is at 1.3800 followed by 1.3775.”

Next 1-3 weeks: “Our latest narrative was from last Thursday (15 Apr, spot at 1.3780) where we highlighted that ‘while shorter-term momentum has not improved by much, a break of 1.3810 is not ruled out’. We added, ‘GBP has to close above 1.3810 before a sustained advance can be expected (the next resistance is at 1.3850)’. We also noted that ‘the prospect for such a move is not high but it would remain intact as long as GBP does not move below 1.3715 within these few days’. However, we did not anticipate last Friday’s ‘sped-up’ price actions where GBP plummeted briefly to 1.3717 before rocketing to 1.3850. While the advance has covered considerable grounds in a short time, GBP could strengthen further to 1.3890. This level is followed by another rather strong resistance at 1.3920 (month-to-date high). On the downside, a breach of 1.3750 (‘strong support’ level) would indicate that GBP is not ready to advance further.”