The recovery in Cable is now targeting the 1.2230 region, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We highlighted yesterday that ‘the decline in GBP could probe the 1.2065 support first before stabilization can be expected’. GBP dropped to 1.2075 before staging a surprising rapid and robust rebound that sent it back up to 1.2228 (closed at 1.2196). While the rapid rebound is running ahead of itself, there is scope for GBP to edge above the strong resistance at 1.2230. For today, 1.2260 is unlikely to come into view. Support is at 1.2175 but the stronger level is at 1.2145.”
Next 1-3 weeks: “We highlighted the oversold conditions yesterday (18 May, spot at 1.2105) and expected any decline in GBP to be at a slower pace. However, we did not anticipate the swift and sharp recovery that came close to taking out our ‘strong resistance’ level at 1.2230 (high of 1.2228). Upward momentum has been dented considerably and unless GBP can move and stay below 1.2145 within these 1 to 2 days, a break of 1.2230 would indicate that the weak phase that started earlier last week (see annotations in chart below) has run its course.”
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