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According to FX Strategists at UOB Group, Cable’s outlook remains positive and could extend the upside to the 1.4290 level in the next weeks.

Key Quotes

24-hour view: “Our expectation for a stronger GBP was correct but we underestimated the strength of the rally as it surged to 1.4220 (we were of the view that 1.4200 is likely out of reach). The rally is deeply overbought but there is room for GBP to test the major resistance at 1.4235 first before easing. A move to the next major resistance at 1.4290 would come as a surprise. Support is at 1.4170 followed by 1.4140.”

Next 1-3 weeks: “We have held a positive view in GBP since early last week. After GBP pulled back sharply from 1.4167, we noted on Monday (17 May, spot at 1.4085) that GBP ‘has to close above 1.4160 before a sustained advance can be expected’. GBP soared to 1.4220 yesterday (18 May) before closing at 1.4189. The boost in momentum indicates that the next up-leg has started. A break of the major resistance at 1.4235 would shift the focus to 1.4290. Overall, GBP is expected to stay strong as long as it stays above 1.4100 (‘strong support’ level was at 1.4050 yesterday).”

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