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Cable is still seen sticking to the consolidative theme between 1.29 and 1.32 in the next weeks.

Key Quotes

24-hour view: “Our view yesterday was ‘the impulsive decline in GBP has room to extend further but oversold conditions suggest 1.2955 is likely out of reach’. While GBP managed to crack 1.2955, the decline was short-lived as it snapped back higher from 1.2942 to end the day on a firm note at 1.3030 (+0.23%). The sharp bounce amid oversold condition suggests 1.2942 is likely a short-term bottom and this level is not expected to come into the picture today. From here, the rebound has scope to extend higher but for now, any advance is viewed as part of a 1.2995/1.3080 range (a sustained rise above 1.3080 is not expected).”

Next 1-3 weeks: “While our view has been proven wrong on many occasions before, to be proven wrong within a single day is not exactly common. When GBP edged above the top of our previously expected 1.2900/1.3200 range last Friday, we indicated yesterday (03 Feb, spot at 1.3175) that ‘the risk has shifted to the upside towards 1.3285’. However, GBP nosed dived and gave up most if not all of its strong gains from late last week as it plunged by -1.55% (the largest 1-day drop since Nov 2018). The recent sharp and rapid but short-lived price actions have resulted in a mixed outlook. From here, we are reverting back to our view from earlier last week wherein GBP is expected to trade in an erratic manner between the two major levels of 1.2900 and 1.3200.”