In opinion of FX Strategists at UOB Group, Cable still faces chances of a visit to the mid-1.2400s in the near term.
24-hour view: “Expectation for GBP to “edge above 1.2385” did not materialize as it traded in a relatively quiet manner between 1.2313 and 1.2371. Momentum indicators are mostly ‘neutral’ now and GBP could continue to trade sideways for today, likely between 1.2290 and 1.2360”.
Next 1-3 weeks: “As highlighted, the recovery in GBP that started late last week could extend to 1.2450 but ‘confirmation’ is only upon a NY close above 1.2380. Shorter-term momentum indicators appear to be stalling and the prospect for further GBP strength has diminished somewhat. However, only a break of 1.2235 (strong support previously at 1.2200) would indicate that the recovery phase hasrun its course. Meanwhile, GBP could consolidate at these higher levels for a couple of days before ‘deciding’ whether to extend its recovery”.