Cable could trade within a downward bias but the move is expected to remain within the broader 1.2430/1.2650 range, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Yesterday, we held the view that GBP ‘could break 1.2500 but is unlikely able to maintain a toehold below this level’. Our expectation was not wrong as GBP dropped to a low of 1.2480 before staging a sharp and swift rebound (overnight high of 1.2563). While the rapid bounce appears to be running ahead of itself, there is scope for GBP to extend towards 1.2605. For today, the major resistance at 1.2650 is not expected to come under threat. Support is at 1.2530 followed by 1.2500. The 1.2480 low is not expected to come into the picture.”
“We highlighted yesterday (13 Jul, spot at 1.2625) that GBP ‘appears to be struggling to maintain its momentum’. We added, ‘while the outlook is still deemed as positive, GBP has to close above the major 1.2685 resistance before further sustained gains can be expected’. GBP subsequently plunged to an overnight low of 1.2551 before extending its decline after NY close. While our ‘strong support’ at 1.2520 is still intact, the price action is enough to indicate that the positive phase that started earlier this month has run its course. The current pull-back has scope to extend lower but at this stage, any weakness is viewed as part of a 1.2430/1.2650 range. In other words, GBP is unlikely to weaken significantly below 1.2430.”
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