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According to FX Strategists at UOB Group, the rally in Cable is expected to have ended on a breakdown below the 1.2970 mark.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the sharp pullback is viewed as part of an on-going correction phase’. We added, ‘the pullback in GBP could extend lower towards 1.3025’ and ‘the next support at 1.2990 is unlikely to come into the picture’. Our view was not wrong as GBP dropped to a low of 1.3005 before rebounding quickly to end the day largely unchanged at 1.3078 (-0.05%). The short-term weakness appears to have stabilized and for today, GBP is likely to consolidate and trade between 1.3020 and 1.3125.”

Next 1-3 weeks: “While we have expected GBP to strengthen since 21 Jul (spot at 1.2670); in our latest narrative from last Thursday (30 Jul, spot at 1.2980), we held the view that GBP ‘could continue to advance but any potential gain is likely to be relatively modest. Next resistance is at 1.3080’. However, GBP blast past 1.3080 and surged to a high of 1.3170 last Friday. The subsequent sharp and rapid pull-back has dented the upward momentum considerably and this coupled with overbought conditions suggest the rally in GBP could be coming to an end soon. From here, unless GBP moves and stays above 1.3170 within these few days, a breach of 1.2970 (‘strong support’ level previously at 1.2850) would indicate that the current positive phase in GBP has run its course.”