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UOB Group’s FX Strategists see Cable attempting a move beyond the 1.3400 mark in the short-term horizon.

Key Quotes

24-hour view: “While we expected GBP to strengthen yesterday, we were of the view that ‘1.3360 is likely out of reach’. The subsequent GBP strength exceeded our expectation as it rose to a high of 1.3396. The advance was however short-lived as GBP plunged to an overnight low of 1.3265 before snapping back up. The choppy price actions have resulted in a mixed outlook even though the weakened underlying tone suggests that GBP could edge lower and test the 1.3260 level. The next support at 1.3230 is unlikely to come into the picture. Resistance is at 1.3360 followed by 1.3400.”

Next 1-3 weeks: “We have held a positive view in GBP since last Tuesday (17 Nov, spot at 1.3210). In our latest narrative from yesterday (23 Nov), we indicated that ‘upward momentum has improved and a break of 1.3322 would shift the focus to 1.3360 (followed by 1.3400)’. That said, we did not anticipate the sped-up price actions as GBP blew past 1.3322 and 1.3360 and hit a high of 1.3396. The advance was however short-lived as GBP plummeted from the high (overnight low of 1.3265). Despite the set-back, it is too soon to call for a short-term top. As long as 1.3200 is intact (no change in ‘strong support’ level), there is chance, albeit not a high one, for GBP to push above 1.3400. However, overbought shorter-term conditions could lead to a couple of days of consolidation first. Looking forward, the next resistance level of note above 1.3400 is at the year-to-date high of 1.3481.”