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In light of the recent price action, the upside in Cable carries the potential to extend beyond 1.2300 the figure in the near term, suggested FX Strategists at UOB   Group.

Key Quotes

24-hour view: “We expected the “recovery in GBP to extend higher” yesterday but anticipated “strong resistance at 1.2130″. However, GBP not only blew past 1.2130 but also cracked a few more resistance levels with ease as it rocketed to an overnight high of 1.2258. From here, a move above the overnight high seems likely but a break of last month’s 1.2310 top would come as a surprise (minor resistance at 1.2285). Support is at 1.2200 followed by 1.2170″.

Next 1-3 weeks: “We indicated yesterday “downward momentum has eased” but the subsequent supersized gain of +1.37% (the second largest 1-day advance this year) was clearly unexpected. From here, the strong rebound from Tuesday’s (03 Sep) low of 1.1959 appears to have scope to extend above last month’s 1.2310 top. For now, the prospect for extension to the next resistance at 1.2380 is not high (there is a minor resistance at 1.2350). On the downside, only a move below 1.2120 would indicate that the current recovery phase has run its course”.