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Cable is still seen within the 1.3580-1.3760 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that ‘there is scope for GBP to test 1.3710 first before a pullback can be expected’. We added, ‘the major resistance at 1.3760 is unlikely to come into the picture’. The subsequent advance was more robust than expected as GBP rose to 1.3740 before settling on a firm note at 1.3736. While upward momentum has not improved by all that much, GBP could edge above 1.3760 but a sustained advance above this level is unlikely (next resistance is at 1.3800). On the downside, a break of 1.3690 (minor support at 1.3710) would indicate the current upward pressure has eased.”

Next 1-3 weeks: “We have held the same view since last Thursday (28 Jan, spot at 1.3665) where we highlighted that ‘the bias is tilted to the downside but any weakness is viewed as part of a 1.3580/1.3760 range’. We expected GBP to drift lower but were of the view that ‘a sustained decline below 1.3580 is unlikely’. However, we did not quite anticipate the drop to 1.3566 yesterday (04 Feb) and the subsequent sharp bounce. The price actions have clouded the outlook and only a clear break (daily closing) below 1.3580 or above 1.3760 would indicate that GBP is ready for a sustained directional move.”