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Cable’s stance remains neutral and could test the 1.3360 region in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for a short-term top yesterday was clearly wrong as GBP punched above the major 1.3215 resistance and accelerated to a high of 1.3295. While the rally is clearly at overbought levels, there is no sign of weakness yet and further GBP gains would not be surprising. That said, the pace of any further up-move would be likely be slower and the next resistance at 1.3330 could temporarily cap GBP gains. Support is at 1.3235 followed by 1.3200. The latter level is unlikely to be threatened from here”.

Next 1-3 weeks: “We have held a ‘positive’ GBP view since last Tuesday (11 Sep, spot at 1.3025) wherein we indicated the “corrective rebound could extend to 1.3170″. We added on Tuesday (18 Sep, spot at 1.3150) that despite being overbought, the advance has scope to extend towards 1.3215. When GBP dropped sharply from an exact high of 1.3215, we indicated yesterday (20 Sep, spot at 1.3140) that “the risk of a short-term top has increased”. Despite our reservation, GBP punched above 1.3215 and hit an overnight high of 1.3295. The sharp and impulsive rally suggests there is scope for further GBP strength to the July’s peak of 1.3363. That said, as the rally is in overbought territory now, GBP has to continue to move higher in the next few days as a prolonged consolidation would quickly increase the risk of a short-term top. All in, we will continue to hold a ‘positive’ GBP view as long as the ‘key support’ at 1.3170 is intact (level previously at 1.3060)”.