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Cable’s stance still looks constructive, although a breach of 1.2370 should leave an interim top in place, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “After soaring to a high of 1.2641 last Thursday (30 Apr), the subsequent abrupt and sharp decline from the high came as a surprise. While the rapid drop appears to be running ahead of itself, there is room for GBP to test 1.2410 first before the current downward pressure should ease. For today, the next support at 1.2370 is unlikely to come into the picture. Resistance is at 1.2500 followed by 1.2530.”

Next 1-3 weeks: “We held a slightly positive view on GBP since last Tuesday (28 Apr, spot at 1.2425) and indicated that GBP ‘could edge higher to 1.2535’. We added, ‘GBP has to crack 1.2535 before a stronger and more sustained advance can be expected’. GBP surged past 1.2535 on Thursday (30 Apr) and jumped to a high of 1.2644 before staging a surprisingly sharp and rapid retreat. For now, the overall outlook for GBP still appears to be positive and only a breach of 1.2370 (‘strong support’ level) would indicate that 1.2644 is a short-term top.”