In opinion of FX Strategists at UOB Group, the upside momentum in Cable could extend to the 1.4235 level in the next weeks.
Key Quotes
24-hour view: “While our expectation for GBP to strengthen yesterday was correct, our view that ‘the major resistance at 1.4110 is unlikely to come under threat’ was not as GBP easily blew past 1.4110 (high of 1.4158). The sharp and rapid rally is overstretched but it is not showing signs of weakness just yet. However, any further GBP strength is likely limited to a test 1.4175. A move to the year-to-date high at 1.4235 would come as a surprise. On the downside, a breach of 1.4070 would indicate that the current upward pressure has eased (minor support is at 1.4100).”
Next 1-3 weeks: “We highlighted yesterday that ‘the strong build-up in momentum suggests further GBP strength’. We added, ‘the next resistance is at 1.4110’. That said, we did not anticipate the rapid manner by which GBP blast past 1.4110 (GBP surged to 1.4158 during early NY session). Upward momentum remains strong and the focus has shifted to the year-to-date high of 1.4235. On the downside, a breach of the ‘strong support’ at 1.4020 (level was at 1.3940 yesterday) would indicate that the current upward pressure has eased.”
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