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Cable’s occasional pullbacks should meet strong contention in the 1.2940 region, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP briefly spiked to a high 1.3118 during NY hours before easing of quickly. The rapid swing has resulted a mixed outlook and the current movement is likely part of a broader consolidation range. In other words, GBP is expected to trade sideways for today, likely within a 1.3010/1.3110 range”.

Next 1-3 weeks: “We highlighted last Friday (28 Sep, spot at 1.3075) “downward momentum has picked up and the chance for a break below 1.3020 appears to be higher than even” and added, “a clear break below 1.3020 would indicate GBP is ready to challenge the next support at 1.2940″. GBP subsequently cracked 1.3020 during NY hours on Friday (low of 1.3000) before rebounding slightly yesterday (01 Oct). While downward momentum has not improved all that much, the near-term bias is on the downside even though any GBP weakness may struggle to break 1.2940. All in, we expect GBP to stay under pressure in the coming days unless it can reclaim the 1.3170 ‘key resistance’.