Cable remains neutral although a potential test of the 1.2470 region remains on the cards, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Expectation for GBP to “test 1.2600″ did not materialize as it slipped to an overnight low of 1.2510 (high of 1.2581 during early Asian hours). While the decline lacks momentum, there is scope for GBP to edge lower even though the strong 1.2470 support is unlikely to come under threat (minor support at 1.2490). Resistance is at 1.2540 followed by 1.2570. The 1.2581 top is not expected to come into the picture for today”.
Next 1-3 weeks: “GBP snapped a 3-day advance and dropped to an overnight low of 1.2515. The price action is line with our view from last Friday (12 Jul, spot at 1.2525) wherein GBP is “expected to trade sideways”. The high of 1.2580 last Friday was not far below the top of our expected 1.2470/1.2600 range and now it appears GBP is ready to test the bottom of the range. A dip below 1.2470 is not ruled but GBP has to register a NY closing below 1.2440 in order to indicate that it is ready to move below the year-to-date low near 1.2410. At this stage, the prospect for such a scenario is not high”.
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