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FX Strategists at UOB Group stay neutral on Cable, adding that could re-visit the 1.3100 area in the next weeks.

Key Quotes

24-hour view: “The outsized and frenetic rally in GBP that sent it rocketing to a high of 1.3036 (from a low of 1.2764 during early Asian hours) was clearly not anticipated. The rally is severely over-extended and from here, we expect GBP to take a ‘breather’ and further strong gain seems unlikely. That said, a move above the 1.3036 top is not ruled out but any advance is viewed as part of a higher 1.2940/1.3060 consolidation range”.

Next 1-3 weeks: “While we indicated yesterday (01 Nov, spot at 1.2830) that the “negative phase has ended” and expected the “recovery to extend higher”, the subsequent explosive price action that sent GBP rocketing to a high of 1.3036 came as a surprise (to put it mildly). Despite the outsized rally, we do not think the price action is the start of a major bullish reversal. That said, we see room for the current GBP strength to extend to 1.3100 but in view of the severely overbought conditions, the rally should at least temporary ease upon off from there. On the downside, 1.2840 is likely strong enough to hold any interim GBP weakness, at least for the next one week or so”.