In light of the recent performance, Cable is now expected to move within a sideline theme, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Expectation for GBP to “trade at a lower range” was incorrect as it spiked briefly to a high 1.2896 before dropping back to end the day on a firm note at 1.2853 (+0.57%). While momentum has not improved by much, there is room for GBP to test the 1.2900 level. For today, a sustained rise beyond this level is not expected (next resistance is at 1.2930). Support is at 1.2825 followed by 1.2795″.
Next 1-3 weeks: “One day after ‘probing’ the bottom of our expected 1.2770/1.2930 range (low of 1.2769 last Friday), GBP staged a sudden and strong rebound and cracked the ‘strong resistance’ level of 1.2865 (overnight high of 1.2896). The price action suggests that GBP is not ready to move below 1.2770 just yet (we indicated last Friday “a NY closing below 1.2770 could lead to further weakness to 1.2700″). From here, GBP is deemed to have move back into a sideway-trading phase. For the next couple of weeks, GBP is expected trade sideways between 1.2770 and 1.2930″.
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