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Cable is seen neutral for the time being although it could attempt a test of the upper bound of the 1.3030/1.3220 range, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP “to extend rally to 1.3165 first before it should ease off”. However, GBP dropped sharply and hit 1.3029 before staging a strong and swift rebound. The rapid swing has resulted in a mixed outlook and GBP is expected to trade sideways today, albeit likely at a higher range of 1.3040/1.3140″.

Next 1-3 weeks: “While we indicated last Friday “the odds for further GBP weakness have clearly diminished”, the pace and extent of the subsequent rally in GBP was not expected (over Thursday and Friday, GBP gained a whopping +1.43%, the largest 2-day gain in 8 months). At this stage, we continue to hold a neutral stance and view the current GBP strength as part of a higher trading range. In other words, we do not expect a sustained up-move from here. That said, the immediate bias is on the upside and for the next few days, we expect GBP to probe the top of the expected 1.3030/1.3220 consolidation range”.