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In opinion of FX Strategists at UOB Group, the next relevant hurdle for Cable emerges at 1.4100.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is room for the advance in GBP to test 1.3865 first before easing’. Instead of ‘testing’ 1.3865, GBP blast past this level and rocketed to 1.3993. While clearly overbought, there is room for GBP to move above last month’s peak near 1.4020. For today, the next major 1.4100 is not expected to come into the picture. Support is at 1.3955 followed by 1.3920.”

Next 1-3 weeks: “We noted yesterday (19 Apr, spot at 1.3825) that ‘the advance in GBP has covered considerable ground but it could strengthen further to 1.3890’. While our view for GBP to strengthen is correct, the sudden lift-off that sent GBP rocketing to 1.3993 came as a surprise. Note that GBP gained +1.01% yesterday, its biggest 1-day advance since mid-Jan. The rapid rise appears to be a bit overdone but is not showing any sign of weakening just yet. In other words, GBP could advance further even though the next major resistance at 1.4100 may not come into the picture so soon. On the downside, a breach of 1.3850 (‘strong support’ level was at 1.3750 yesterday) would indicate that the current GBP strength has come to an end. On a shorter-term note, 1.3920 is already a strong support level.”

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