In opinion of FX Strategists at UOB Group, Cable remains side-lined between the 1.4090-1.4250 range for the time being.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is scope for GBP to rise above the major resistance at 1.4235’ but we were of the view that ‘the next resistance at 1.4265 is unlikely to come into the picture’. While our view was not wrong as GBP rose to 1.4250, we did not anticipate the subsequent sharp sell-off from the high (NY low of 1.4147). The rapid drop has room to extend but oversold conditions suggest that any weakness is likely limited to a test of 1.4120. The next support at 1.4090 is unlikely to come under threat. On the upside, a breach of 1.4190 (minor resistance is at 1.4170) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “Last Friday (28 May, spot at 1.4200), we highlighted that GBP ‘has to close above 1.4235 before a sustained advance can be expected’. While GBP rose above 1.4235 yesterday (01 Jun), it fell sharply after touching 1.4250. The build-up in shorter-term momentum has fizzled out and GBP is unlikely to close above 1.4235. From here, GBP is more likely to trade within a 1.4090/1.4250 range.”
