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Cable is now facing the next key target at the 1.3200 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the rapid rebound appears to have room to extend higher but for today, a break of 1.3125 appears unlikely (next resistance is at 1.3170)’. The subsequent advance exceeded our expectation by a fair bit as GBP soared to a high of 1.3160 before easing off quickly. For today, further GBP strength is not ruled but overbought conditions suggest a clear break of 1.3200 is unlikely (last month’s peak at 1.3170 is already a solid resistance). Support is 1.3095 followed by 1.3060.”

Next 1-3 weeks: “We have held a positive view in GBP for more than 2 weeks now and in our latest narrative from Monday (03 Aug, spot 1.3070), we indicated that waning momentum and overbought conditions suggest that ‘the rally in GBP could be coming to an end soon’. We added, ‘unless GBP moves and stays above 1.3170 within these few days, a breach of 1.2970 (‘strong support’ level previously at 1.2850) would indicate that the current positive phase in GBP has run its course’. GBP dropped to a low of 1.2982 on Tuesday before rebounding and is currently approaching 1.3170. From here, a break of this level would not be surprising but there is another strong resistance at 1.3200 and GBP has to move clearly above 1.3200 before further sustained advance can be expected. Overall, the positive phase is still intact and a break of 1.3200 would indicate that the next up-leg has started. Conversely, a breach of 1.3030 (‘strong support’ level previously at 1.2970) would indicate the recent advance in GBP has run its course. Looking forward, the next resistance above 1.3200 is at 1.3320.”