In opinion of FX Strategists at UOB Group, Cable could now navigate within the 1.3800-1.3930 range in the next weeks.
Key Quotes
24-hour view: “Our expectation for GBP to ‘decline further’ last Friday was incorrect as it soared to 1.3875 before closing on a firm note at 1.3868 (+0.41%).The overbought advance has room to test 1.3890 but a sustained rise above this level is unlikely (next resistance is at 1.3930). Support is at 1.3845 but only a break of 1.3825 would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “We highlighted last Friday (13 Jul, spot at 1.3810) that GBP ‘could drop further but there is another solid support at 1.3765’. We added, ‘a break of 1.3870 would indicate that the downside risk in GBP has dissipated’. We did not anticipate the subsequent sharp and rapid bounce in GBP that sent it to a high of 1.3875 during NY session. GBP is deemed to have moved into a consolidation phase and could trade within a 1.3800/1.3930 range for now.”