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Cable could extend the upside momentum to the 1.2465 level if 1.2380 is cleared, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to strengthen last Friday but were of the view that ‘the prospect for a sustained rise beyond 1.2380 is not high’. While GBP subsequently moved above 1.2380, it retreated after touching 1.2394. While the overall outlook appears to be positive for GBP, upward momentum has not improved by much. For today, there is scope for GBP to edge above 1.2400 but the next resistance at 1.2430 is unlikely to come under threat. On the downside, only a move below 1.2310 (minor support is at 1.2335) would indicate the current mild upward pressure has eased.”

Next 1-3 weeks: “We indicated last Friday (29 May, spot at 1.2315) that GBP ‘has to close above 1.2380 before a sustained advance can be expected’. GBP subsequently rose to 1.2394 before easing off to close at 1.2347 in NY (+0.24%). Upward momentum has improved slightly and we continue to wait for a daily closing above 1.2380 before adopting a more a positive outlook in GBP. The prospect for such a move is quite high as long as GBP does not move below 1.2275 within these 1 to 2 days. Looking ahead, a daily closing above 1.2380 could lead to an advance in GBP towards 1.2465, possibly above 1.2500.”