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Cable needs to break above 1.3120 to allow for the continuation of the upside pressure, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that GBP ‘could drift lower but any weakness is unlikely to extend much below 1.3030’. We added, ‘the next support at 1.2990 is unlikely to come into the picture’. Our view was not wrong as GBP dipped to a low of 1.3017 before recovering slightly. The underlying tone has weakened somewhat and from here, GBP could drift lower but is unlikely to break the strong support at 1.2990 (1.3020 is already quite a strong level). Resistance is at 1.3085 followed by 1.3120.”

Next 1-3 weeks: “After GBP surged to a high of 1.3135, we indicated last Thursday (22 Oct, spot at 1.3135) that ‘there is room for further GBP strength towards 1.3250 but it is left to be seen if GBP can maintain a foothold above this level’. Since then, GBP has not been able to make much headway on the upside. Upward momentum is beginning to ease but only a break of 1.2990 (no change in ‘strong support’ level) would indicate that the current upside risk has dissipated. Meanwhile, in order to rejuvenate the current flagging momentum, GBP has to move and stay above 1.3120 within these 1 to 2 days or the odds for further GBP strength would diminish quickly.”