Cable’s view remains constructive, although a test of tops in the 1.3010 region seems unlikely in the near-term, suggested FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday the “combination of lackluster momentum and overbought conditions suggest 1.2985 could be a short-term top”. We added, “GBP is more likely to consolidate and trade sideways within a1.2915/1.2975 range”. GBP subsequently slipped from an Asian hours high of 1.2970 to a low of 1.2911 during NY session. The underlying tone has weakened and from here, the risk is tilted to the downside towards 1.2900. The next support at 1.2875 is likely ‘safe’ for today. Resistance is at 1.2950 followed by 1.2975”.
Next 1-3 weeks: “After GBP popped to 1.2985 on Monday, we highlighted yesterday (19 Nov, spot at 1.2950) that “while upward momentum has picked up, the prospect for GBP to move above last month’s peak at 1.3012 is still not that high”. The retreat in GBP yesterday (1.2925, -0.20%) reinforces our view but only a break of 1.2875 (no change in ‘strong support’ level) would indicate the current mild upward pressure has eased. Looking forward, if GBP were to move below 1.2875, it could trade sideways for a period”.