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FX Strategists at UOB Group noted that further gains in Cable are probable while above 1.2760.

Key Quotes

24-hour view: “GBP once again failed to break the 1.2760 resistance as it plummeted from a high of 1.2757 and hit a low of 1.2620 (before snapping higher). The rapid swings have resulted in a mixed outlook and GBP could continue to trade in a choppy manner for today. That said, unless GBP can break 1.2760 and stay above this level, the risk of deep pullback would increase quickly.”

Next 1-3 weeks: “We highlighted on Monday (08 Jun, spot at 1.2705) that ‘upward momentum has received a boost’ and ‘further GBP strength to 1.2800 would not be surprising’. Since then, GBP has not been able to make much headway on the upside. GBP plummeted to 1.2620 yesterday (09 Jun) before rebounding quickly. The low was not far above our ‘strong support’ level at 1.2610. Upward momentum is waning rapidly and unless GBP moves and stays above 1.2760 by end of today, the prospect for further GBP strength to 1.2800 would diminish quickly. On the downside, the ‘strong support’ level remains unchanged at 1.2610 and a break of this level would indicate that the positive phase that started earlier last week has run its course. If GBP breaks above 1.2800, the next resistance is at 1.2840.”

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