FX Strategists at UOB Group hinted at the likeliness that Cable could have carved a short-term top.
Key Quotes
24-hour view: “While we expected a higher GBP yesterday, we were of the view that “a clear break of 1.3215 would come as a surprise”. GBP subsequently touched an exact high of 1.3215 but the sharp and rapid drop that hit a low of 1.3098 was clearly not expected. The 1.3215 high is likely a short-term top and the current movement is viewed as part of a consolidation phase. In other words, GBP is expected to trade sideways from here, likely within a 1.3090/1.3190 range”.
Next 1-3 weeks: “We highlighted two days ago (18 Sep, spot at 1.3150) that “while the advance in GBP is approaching overbought, there is no sign of weakness just yet and there is scope for further strength towards the next major level of 1.3215″. GBP hit an exact high of 1.3215 during London hours yesterday before plummeting on the back of Brexit headlines. The failure to break clearly above the 1.3215 resistance suggests GBP may not be able much headway from here. That said, only a break of 1.3060 (‘key support’ previously at 1.3045) would indicate that 1.3215 is a short-term top. All in, unless GBP can ‘blast’ above 1.3215 within these 1 to 2 days, the risk of a short-term top appears to be quite high”.
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