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Cable remains near term neutral and could attempt a test of the 1.3170 area, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected a higher GBP last Friday but indicated the major 1.3170 level could be “out of reach”. While GBP extended its gains as expected, the sharp pull-back from a high of 1.3145 was not exactly expected. The 1.3145 high is likely a short-term top and is not expected to be challenged, at least not for today. However, it is premature to expect a sustained pull-back as ‘neutral’ indicators suggest GBP is more likely to consolidate and trade sideways (to slightly lower). Expected range for today; 1.3030/1.3120″.

Next 1-3 weeks: “We have held the same view since Tuesday (11 Sep, spot at 1.3025) wherein the current rebound in GBP could extend to 1.3170. The price action over the past couple days bodes well for our view and 1.3170 appears to be within reach sometime next week. At this stage, we still do not expect a sustained move above this level but the odds for further upward extension have increased. On the downside, the ‘key support’ is raised to 1.3000 from 1.2900 previously”.

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