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Cable’s upside momentum could extend to the 1.3200 neighbourhood in the near-term, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “While our expectation for GBP to strengthen last Friday is correct, we underestimated the extent of the advance as GBP cracked the strong 1.3020 resistance and soared to 1.3053 (before extending its gains upon opening this morning). The rally is severely overbought now but is not showing sign of tiring just yet. In other words, GBP could advance further to 1.3130 (next resistance is at 1.3160). On the downside, a breach of 1.3020 would indicate the current strong advance has run its could (minor support is at 1.3040).”

Next 1-3 weeks: “While our view that from Friday (06 Mar, spot at 1.2950) that GBP ‘is in a recovery phase and could move above 1.3020’ is correct, the pace of the advance exceeded our expectation as GBP soared to a high of 1.3053 during NY session on Friday (before extending its gains this morning). The stronger than expected recovery has room to extend further to 1.3200. At this stage, the prospect for a sustained advance above this level is not high. Looking forward, if GBP were to break above 1.3200, it would indicate last month’s 1.2726 low is more significant than expected currently. On the downside, the ‘strong support’ level has moved higher to 1.2960 from Friday’s level of 1.2850.”