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Cable could slip back to the 1.2820 region if it clears 1.2850, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘the rapid pullback could extend lower but last week’s low near 1.2850 is not likely to come into the picture’. In line with expectation, GBP dropped to 1.2860 before recovering. While downward momentum appears to have waned somewhat, it is too early to expect a sustained rebound. For today, GBP is likely to consolidate at these lower levels. Expected range for today, 1.2850/1.2940.”

Next 1-3 weeks: “GBP dropped to 1.2860 yesterday, not far above the bottom of our expected 1.2850/1.3030 sideway trading range. Despite the decline, there is no marked improvement in downward momentum. While a dip below 1.2850 is not ruled out, only a NY close below 1.2820 would suggest GBP is ready to embark on a sustained down-move. The prospect for such a scenario is low at the moment but would continue to increase over the next few days unless GBP can move and stay above 1.2940.”