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In light of the recent price action, Cable still targets the 1.3760 area in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to strengthen further yesterday but we were of the view that it ‘may not be able to maintain a foothold above last week’s peak at 1.3703’. GBP subsequently rose to 1.3701 before retreating quickly. While upward pressure has eased, the decline from 1.3701 is viewed as part of a consolidation phase and not the start of a deeper pullback. In other words, GBP is likely to trade sideways for today, expected to be within a 1.3600/1.3700 range.”

Next 1-3 weeks: “Two days ago (11 Jan, spot at 1.3525), we highlighted that ‘a daily closing below 1.3460 could lead to GBP moving lower to 1.3400’. GBP subsequently dipped to 1.3451 before staging a surprisingly sharp rise yesterday to a high of 1.3670. The prospect for GBP weakness has dissipated and while the risk has shifted to the upside, any advance is expected to face solid resistance at 1.3760. Overall, GBP is expected to trade with an upward bias with 1.3550 acting as ‘strong support’ level.”