In opinion of FX Strategists at UOB Group, Cable faces extra gains on a clear of the 1.4235 level in the near-term.
Key Quotes
24-hour view: “We highlighted yesterday that ‘the pullback in GBP could extend lower but a break of 1.4100 is unlikely’. Our view was not wrong as GBP dropped to 1.4113 before rebounding quickly. Downward pressure has more or less dissipated and the current movement is viewed as part of a consolidation. In other words, GBP is expected to trade sideways for today, likely within a 1.4125/1.4195 range.”
Next 1-3 weeks: “Our narrative from last Friday (21 May, spot at 1.4185) still stands. As highlighted, it is too early to expect GBP to move into a new positive phase. GBP has to close above 1.4235 before a move to 1.4290 can be expected. The prospect for GBP to move clearly above 1.4235 is not high but it would remain intact as long as the ‘strong support’ at 1.4100 (no change in level) is not breached.”
