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Cable could extend the upside momentum to the 1.2400 mark in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we detected the ‘uptick in momentum’ and expected a ‘slightly higher GBP’. However, GBP staged an abrupt lift-off and rocketed to end the day up by +1.19% (1.2338), the biggest 1-day gain in almost 2 months. While further GBP strength is not ruled out in the days ahead, the current rally is deep in overbought territory and GBP may not have enough fuel to move clearly above the overnight high of 1.2363. For today, the rally in GBP probably needs to catch its breath and GBP is likely trade sideways. Expected range for today, 1.2265/1.2365.

Next 1-3 weeks: “We narrowed our expected consolidation range for GBP from 1.2100/1.2400 to 1.2100/1.2320 yesterday (26 May, spot at 1.2200). We did not anticipate the subsequent strong surge in GBP that sent it higher by +1.19% (1.2338). Upward momentum has improved considerably but at this stage, it is too soon to expect the start of a sustained advance in GBP. Only a daily closing above 1.2400 would indicate the start of a move towards 1.2460 (and possibly higher). Meanwhile, GBP is expected to trade with an upward bias towards 1.2400 as long as it does not move below 1.2230.”