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Cable faces a probable correction to the 1.2450 region or even 1.2400 in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘upward momentum has deteriorated rapidly and for today, GBP is not expected to move above the 1.2812 high’. We expected GBP to weaken but we were of the view it “is likely to drift lower to 1.2680”. Instead of drifting lower, GBP cracked 1.2680 and plunged to an overnight low of 1.2587. The rapid decline is severely oversold but there is room for the weakness in GBP to extend to 1.2510. For today, the next support at 1.2450 is unlikely to come into the picture. Resistance is at 1.2590 followed by 1.2630.”

Next 1-3 weeks: “We cautioned yesterday (11 Jun, spot at 1.2745) that the positive phase in GBP that started early last week could be ‘coming to an end’. That said, we did not quite anticipate the sharp sell-off that sent GBP to a low of 1.2587. The break of the ‘strong support’ at 1.2630 indicates that Wednesday’s (10 Jun) 1.2812 high is a short-term top. The current movement is viewed as a corrective pull-back that has scope to extend to 1.2450, possibly as low as 1.2400. The corrective pull-back is deemed as intact unless GBP moves back above 1.2680.”

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