Cable’s upside momentum could extend further in the near term, according to FX Strategists at UOB Group.
24-hour view: “Our expectation for GBP to ‘stage another push higher’ did not materialize as it traded in a relatively narrow range (between 1.2318 and 1.2469) before ending the day slightly lower at 1.2419 (-0.19%). Upward momentum is beginning to show signs of tiring and this coupled with the still overbought conditions suggest limited upside risk for today. From here, GBP could drift lower to 1.2300, possibly even testing the next support at 1.2240. Resistance is at 1.2430 followed by last Friday’s top near 1.2485. The latter level is acting as a strong resistance now.”
Next 1-3 weeks: “There is not much to add to the update from last Friday (27 Mar, spot at 1.2200). As highlighted, the current recovery in GBP has scope to extend higher but the prospect for a move beyond 1.2550 is not high. On the downside, only a break of 1.2000 (‘strong support’ level previously at 1.1880) would indicate that the current upward pressure has eased.”