In opinion of FX Strategists at UOB Group, Cable faces extra volatility in the short term and a break below the 1.1400 mark should not be ruled out yet.
24-hour view: “Our view yesterday was that ‘there is room for GBP to move towards 1.1900’. However, GBP soared above 1.1900 and touched 1.1971 before dropping back down. The rapid swing has resulted in a mixed outlook and this coupled with lackluster momentum suggests GBP could continue to trade in a choppy manner, likely within a 1.1660/1.1980 range.”
Next 1-3 weeks: “As highlighted, GBP could continue to trade in a volatile manner and a break of 1.1400 is not ruled out just yet. That said, shorter-term downward momentum is beginning to wane and the risk of a break of 1.1400 has diminished. However, only a move above 1.2150 (no change in ‘strong resistance’ level) would indicate that GBP is ready to take a breather from its recent ferocious decline. Meanwhile, a 1 to 2 percent daily swing appears to be the new normal for now.