In opinion of FX Strategists at UOB Group, Cable is still expected to navigate within a broad consolidative fashion in the next weeks.
Key Quotes
24-hour view: “Expectation for ‘further GBP weakness’ was incorrect as it rose to 1.2327 before dropping sharply during late NY hours. Despite the relatively rapid decline, downward momentum has not improved by much. That said, there is chance that GBP could dip towards 1.2150. For today, a sustained decline below this level is not expected (next support is at 1.2100). Resistance is at 1.2280 followed by 1.2330.”
Next 1-3 weeks: “When GBP surged to 1.2200 on 27 Mar, we indicated that the ‘recovery in GBP has scope to extend higher but prospect for a move beyond 1.2550 is not high for now’. GBP subsequently extended its gain to 1.2484, traded sideways for several days before lurching lower last Friday (03 Apr) and came close to taking out our ‘strong support’ level at 1.2205. While the ‘strong support’ is still intact, upward pressure has dissipated with the sharp and rapid decline. The immediate risk from here is tilted to the downside but any weakness is viewed as part of a broad1.1950/1.2420 range (a sustained decline below 1.1950 is not expected).”
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