In view of FX Strategists at UOB Group, Cable’s upside momentum could extend to the 1.3300 neighbourhood in the next weeks.
Key Quotes
24-hour view: “We expected a stronger GBP yesterday but held the view that “a clear break of the major 1.3220 resistance is not expected”. GBP subsequently rose and touched a high of 1.3216 before ending the day on a firm note (NY close of 1.3193, +0.36%). While the rally is overbought, there is no sign of weakness just yet and the current GBP strength could extend further to 1.3250 before it should ease off. The next resistance is at last month’s 1.3295 peak and this level is not expected to be challenged, at least not for today. On the downside, only a break of 1.3150 would indicate that a short-term top is in place (minor support is at 1.3170)”.
Next 1-3 weeks: “We have held the same view since Monday (08 Oct, spot at 1.3120) wherein we expect GBP to trade with an upside bias and probe the top of the anticipated 1.3030/1.3220 consolidation range. After a few days of relatively choppy price action, GBP rose in a ‘decisive’ manner and hit a high of 1.3216 before closing at a 3-week high (NY close of 1.3193, +0.35%). Despite the positive price action, it is premature to expect the start of a bullish phase. That said, we see scope for the current GBP strength to extend further and test last month’s 1.3295 peak. In other words, we are holding a ‘positive’ view in GBP now and only a break of the ‘key support’ at 1.3100 would indicate that the current GBP strength has run its course”.
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