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Cable is expected to extend the rangebound theme for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for GBP to “probe the next resistance at 1.2330″ was proven incorrect as Brexit headlines sent it tumbling to a low of 1.2156. Despite the rapid bounce from the low, severely dented upward momentum suggests limited upside risk for today. From here, barring a move above 1.2280 (minor resistance is at 1.2250), GBP could move lower but a break of the solid 1.2150 support is not expected (there is another support at 1.2180)”.

Next 1-3 weeks: “We have held the same view since last Friday (23 Aug, spot at 1.2245) wherein the movement in GBP is viewed as “part of a consolidation phase even though the firm underlying tone suggests GBP is likely to probe the top of the expected 1.2150/1.2380 range first”. After touching a one-month high of 1.2310 on Tuesday (27 Aug), GBP plummeted (on the back Brexit headlines) and came close to the bottom of the expected range at 1.2150 (low of 1.2156). While the positive underlying tone has been dented, we continue to view the current movement as part of a consolidation phase. That said, after yesterday’s price action, GBP would likely to trade at a lower range of 1.2100/1.2300 in the coming days”.