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Cable could attempt a test of the 1.2800 area in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for GBP ‘to test 1.2760 first before a pullback can be expected’ did not materialize. Instead, GBP dropped to 1.2626 first before rebounding to a high of 1.2736. GBP opened on a firm note this morning and upward pressure is building up. From here, GBP could move above 1.2760 even though the major 1.2800 level is likely out of reach. Support is at 1.2700 followed by 1.2660.”

Next 1-3 weeks: “We have held a positive view in GBP since early last. We detected a slowdown in momentum and indicated last Friday (05 Jun, spot at 1.2595) that ‘upward momentum has slowed a tad but a move to 1.2700 is still a distinct possibility’. That said, the subsequent strong surge that quickly blast past 1.2700 was not exactly expected (GBP surged to 1.2730 last Friday). Upward momentum has received a boost and from here, further GBP strength to 1.2800 would not be surprising. Only a break of 1.2560 (‘strong support’ level was at 1.2480 last Friday) would indicate the positive phase in GBP has run its course.”

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