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Cable has likely moved into a consolidation scheme between 1.2950 and 1.3160 for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “GBP had a relatively choppy session yesterday as it reversed an initial sharp decline to 1.3020 before snapping higher to 1.3103. Indicators are showing ‘mixed’ signals and for today, GBP could trade in a choppy manner between 1.3030 and 1.3130.”

Next 1-3 weeks: “We held a positive view in GBP since mid-July. In our latest narrative from last Thursday (06 Aug, spot at 1.3125), we highlighted that ‘the positive phase is still intact but GBP has to move clearly above 1.3200 before further sustained advance can be expected’. GBP subsequently rose to 1.3185 before plummeting by -0.71% last Friday, its biggest 1-day drop in 6 weeks. The sharp drop amidst overbought conditions indicates that 1.3185 is likely a short-term top. While GBP is likely to drift lower from here, any weakness is viewed as part of a 1.2950/1.3160 consolidation. Only a clear break below 1.2950 would indicate that GBP is ready for a deeper pullback.”