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Cable could still extend the recovery unless it breaches the 1.2370 region, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our view for GBP yesterday was that it ‘could test 1.2410 first before the current downward pressure should ease’. GBP subsequently dropped to 1.2405 before rebounding quickly. Downward momentum is beginning to ease and from here, the risk for GBP to drop below 1.2405 is not high. That said, it is too early to expect a sustained advance. Overall, barring a break of 1.2405 (minor support at 1.2420), GBP could edge higher to 1.2510 (minor resistance is at 1.2480).”

Next 103 weeks: “We held a slightly positive view on GBP since last Tuesday (28 Apr, spot at 1.2425) and indicated that GBP ‘could edge higher to 1.2535’. We added, ‘GBP has to crack 1.2535 before a stronger and more sustained advance can be expected’. GBP surged past 1.2535 on Thursday (30 Apr) and jumped to a high of 1.2644 before staging a surprisingly sharp and rapid retreat. For now, the overall outlook for GBP still appears to be positive and only a breach of 1.2370 (‘strong support’ level) would indicate that 1.2644 is a short-term top.”