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FX Strategists at UOB Group do not rule out further upside in Cable to the 1.2800 area in the next weeks.

Key Quotes

24-hour view: “We expected GBP to strengthen last Friday but held the view that the ‘major 1.2700 level is unlikely to come into the picture for today’. The subsequent advance in GBP exceeded our expectation as it soared to a high of 1.2730. While the rally is overbought, upward momentum remains strong and from here, there is room for GBP to test 1.2760 first before a pullback can be expected (next resistance is at 1.2800). Support is at 1.2660 followed by 1.2625.”

Next 1-3 weeks: “We have held a positive view in GBP since early last week. We detected a slowdown in momentum and indicated last Friday (05 Jun, spot at 1.2595) that ‘upward momentum has slowed a tad but a move to 1.2700 is still a distinct possibility’. That said, the subsequent strong surge that quickly blast past 1.2700 was not exactly expected (GBP surged to 1.2730 last Friday). Upward momentum has received a boost and from here, further GBP strength to 1.2800 would not be surprising. Only a break of 1.2560 (‘strong support’ level was at 1.2480 last Friday) would indicate the positive phase in GBP has run its course.”