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FX Strategists at UOB Group believe Cable could now attempt a consolidative theme.

Key Quotes

24-hour view: “While we held the view last Friday that “a short-term bottom is in place”, we expected GBP to “trade sideways”. However, GBP staged a strong advance and hit a high of 1.3734. Despite the relatively strong gain, there is no marked improvement in momentum and while GBP could edge higher from here, a sustained rise is not expected. In other words, GBP is expected to trade sideways to slightly higher, likely holding within a 1.2700/1.2755 range”.

Next 1-3 weeks: “After GBP bounced from 1.2605, we indicated on Friday (24 May) that the beckoning call of 1.2600 has “softened”. The subsequent strong recovery in GBP during last Friday’s London session touched 1.2734. While the high is still below our 1.2760 ‘key resistance’, the price action suggests that GBP has made a short-term bottom at 1.2605. In other words, GBP is expected to trade above 1.2605 for the next 1 to 2 weeks. That said, it is too soon to expect a sustained rebound. From here, GBP is deemed to have moved into a ‘sideway-trading phase’ and is expected to trade between 1.2640 and 1.2850. Looking ahead, only a move above 1.2950 would indicate that 1.2605 is a more significant bottom than currently expected”.