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Cable remains firm and is now expected to test the mid-1.3400s in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The strong surge in GBP last Friday that led to a whopping gain of +1.15% (1.3350) came as a surprise. Further gains are not ruled out but overbought conditions suggest a slower pace of advance and the resistance at 1.3410 could be out of reach (next resistance is at 1.3450). Support is at 1.3300 followed by 1.3260.”

Next 1-3 weeks: “We noted last Friday (28 Aug, spot at 1.3210) that GBP ‘could continue to trade in a choppy manner between the two major levels of 1.3000 and 1.3300’. We added, ‘only a clear break of either one of the two levels would indicate the start of a more sustained directional move’. That said, we did not anticipate the manner by which GBP vaulted to a high of 1.3357 before closing sharply higher at 1.3350 (+1.15%). While the advance appears to be running ahead of itself, robust momentum indicates further GBP strength is likely. From here, GBP could strengthen towards 1.3450, albeit likely at a slower pace. All in, the current positive phase in GBP is deemed as intact as long as it holds above the ‘strong support’ level of 1.3220.”

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