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FX Strategists at UOB Group suggested Cable could now move into a consolidative phase between 1.3860 and 1.4070 in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘could edge below last week’s low at 1.3890’. We added, ‘in view of the lackluster momentum, any further decline is unlikely to threaten the major support at 1.3850’. Our view was not wrong as GBP subsequently dropped to 1.3860. That said, we did not anticipate the sharp bounce from the low (overnight high of 1.3975). The rebound has scope to extend but any further advance is likely limited to a test of 1.3995. The next resistance at 1.4035 is unlikely to come into the picture. Support is at 1.3925 followed by 1.3890.”

Next 1-3 weeks: “On Monday (01 Mar, spot at 1.3975), we held the view that GBP ‘is in a corrective pullback’ and ‘any weakness is likely limited to 1.3850’. While GBP declined as expected, it rebounded strongly after touching 1.3860 yesterday. Downward momentum has more or less dissipated and GBP could trade between 1.3860 and 1.4070 for now.”