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Cable remains firm and could extend the upside momentum to the 1.2600 zone, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to strengthen yesterday but did not anticipate the sudden lift-off that sent it soaring to a high of 1.2506 (closed at 1.2490, +1.16%). Robust upward momentum suggests further GBP gains would not be surprising even though the major 1.2600 resistance is likely out of reach (minor resistance is at 1.2555). On the downside, 1.2420 is expected to be strong enough to hold any pull-back (minor support is at 1.2470).”

Next 1-3 weeks: “Yesterday (01 Jun, spot at 1.2365), we highlighted that ‘we continue to wait for a daily closing above 1.2380 before adopting a more a positive outlook in GBP’. We noted that ‘the prospect for such a move is quite high’ and that ‘a daily closing above 1.2380 could lead to an advance in GBP towards 1.2465, possibly above 1.2500’. However, we did not anticipate the sudden and strong surge that sent GBP to a high of 1.2506. Upward momentum received a strong boost and from here, GBP could continue to advance to 1.2600. Only a move below 1.2360 (‘strong support’ level was at 1.2275 yesterday) would indicate that our positive view in GBP is wrong.”