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In opinion of FX Strategists at UOB Group, Cable is now seen navigating the 1.3600-1.3830 range in the near term.
Key Quotes
24-hour view: “We noted yesterday that GBP ‘is unlikely to weaken further’ and we expected GBP to ‘consolidate and trade between 1.3585 and 1.3670’. Our view for consolidation was incorrect as GBP dipped to 1.3591 before staging a surprisingly sharp rebound (high has been 1.3723 during late NY hours). The rapid bounce appears to be running ahead of itself but there is room for GBP to edge higher to 1.3750 first before a pullback can be expected. The next resistance at 1.3780 is not expected to come into the picture. Support is at 1.3670 but only a breach of 1.3635 would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “Yesterday, we highlighted that there is room for GBP to drop below 1.3550. We added, ‘in view of the oversold conditions, it is left to be seen if it can maintain a foothold below this level’. We did not anticipate the sharp rebound to an overnight high of 1.3723. While our ‘strong resistance’ level at 1.3730 is still intact, the rapid loss in momentum suggests that the chance for GBP to move below 1.3550 has dissipated. From here, GBP is expected to consolidate and trade within a relatively broad range of 1.3600/1.3830.”