In opinion of FX Strategists at UOB Group, the upside momentum in Cable could extend to the 1.3890 level in the next weeks.
Key Quotes
24-hour view: “The strong advance in GBP to a high of 1.3863 yesterday came as a surprise (we were expecting sideway-trading between 1.3730 and 1.3800). While already overbought, the advance has scope to extend but a clear break of last week’s peak near 1.3890 is unlikely (there is another resistance at 1.3870). On the downside, a break of 1.3800 (minor support is at 1.3820) would indicate that the upward pressure has eased.”
Next 1-3 weeks: “On Wednesday (08 Sep, spot at 1.3780), we held the view that GBP has likely moved into a consolidation phase and could trade between 1.3700 and 1.3855 for a period of time. We did not anticipate the sharp bounce yesterday that rose above 1.3855 (high of 1.3863). Despite the rapid rise, it is too soon to expect the start of a sustained advance. That said, there is room for GBP to test last week’s high near 1.3890 as long as it does not move below 1.3760 within these couple of days. Looking ahead, GBP has to close above 1.3910 before a sustained rise can be expected.”
