Cable remains sidelined for the time being although a move to the 1.2580 region is not ruled out, suggested FX Strategists at UOB Group.
24-hour view: “Instead of “edging higher”, GBP traded in a relatively quiet manner within a 1.2439/1.2511 range and registered an ‘inside day’. Momentum indicators are turning neutral and GBP is likely to continue to trade sideways for now. Expected range for today, 1.2430 and 1.2530”.
Next 1-3 weeks: “We highlighted yesterday (17 Sep, spot at 1.2425) that despite the relatively deep pull-back in GBP on Monday (16 Sep), we are holding on to our view that there is “room for GBP to test 1.2580”. The subsequent sharp rebound reinforces our view. That said, 1.2580 is a rather strong resistance and at this stage, the prospect for a clear break of this level is not that high. All in, the recovery phase that started about 2 weeks ago (05 Sep, spot at 1.2245) is deemed as intact until there is a break of 1.2350 (no change in ‘strong support’ level). On a shorter-term note, 1.2390 is already a strong support level”.