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Cable is expected to extend the consolidation for the time being, according FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the bias is for GBP to weaken but the major support at 1.2370 could be out of reach’. Our view was not wrong as GBP dipped to 1.2390 before recovering. The underlying tone still appears to be soft and from here, there is chance for GBP to drift lower towards 1.2370 (minor support is at 1.2390). For today, the prospect for a sustained decline below 1.2370 is not high. Resistance is at 1.2445 followed by 1.2470.”

Next 1-3 weeks: “The rapid manner by which GBP gave up most of its gains from Tuesday was not exactly expected. Our latest narrative from earlier on Tuesday (23 Jun, spot at 1.2485) was that GBP could ‘edge higher but any advance is viewed as part of a 1.2370/1.2610 range’. For now, there is no change in our view but after yesterday’s price action, the 1.2370 support appears to be vulnerable. Looking ahead, a clear break of this level would suggest GBP could weaken further to 1.2300. At this stage, the prospect for such a move is not high but it would continue to increase unless GBP moves and stays above 1.2520 within these 1 to 2 days.”