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FX Strategists at UOB believe Cable could edge higher in the near term and test the 1.2330 region.

Key Quotes

24-hour view: “Instead of trading sideways, GBP rose to a 1-month high of 1.2310 before settling on a firm note at 1.2288. Upward momentum has ticked up, albeit not by much and this could lead to a probe of the next resistance at 1.2330. For today, the sold resistance at 1.2380 is not expected to come into the picture. Support is at 1.2245 followed by yesterday’s low near 1.2210. The latter level is acting as a solid support now and is unlikely to be challenged”.

Next 1-3 weeks: “GBP edged above 1.2300 and touched a 1-month high of 1.2310 before ending the day on a firm note at 1.2288 in NY (+0.58%). The price action is in line with our expectation from last Friday (23 Aug, spot at 1.2245) wherein the current price action is viewed as part of a consolidation phase even though the firm underlying tone suggests GBP is likely to probe the top of the expected 1.2150/1.2380 range first. 1.2380 is a relatively strong resistance and for now, the prospect for a sustained advance above this level is not high”.