In opinion of FX Strategists at UOB Group, Cable remains firm and could attempt a move to the 1.3880 level in the next weeks.
24-hour view: “While we expected GBP to strengthen yesterday, we were of the view ‘1.3800 is not expected to come into the picture’. We underestimated the strength of the advance as GBP soared to 1.3820 before closing on a strong note at 1.3813 (+0.52%). Robust momentum suggests further GBP strength even though the major resistance at 1.3880 is likely out of reach for now (there is another strong level at 1.3850). Support is at 1.3785 followed by 1.3760.”
Next 1-3 weeks: “We highlighted yesterday (09 Feb, spot at 1.2745) that the ‘bias for GBP is on the upside’. However, we were of the view that ‘any advance is likely to be slow and 1.3800 may not come into the picture so soon’. While we correctly anticipated the direction of GBP, the rapid pace of advance was unexpected as GBP soared to an overnight high of 1.3820. Upward momentum has improved considerably and GBP could extend its gains to 1.3880. Overall, the current positive view in GBP is deemed intact as long as GBP does not move below 1.3730 (‘strong support’ level was at 1.3640 yesterday).”