In opinion of FX Strategists at UOB Group, there is still scope for Cable to advance further, although a surpass of the 1.3200 barrier appears unlikely in the near term at least.
24-hour view: “Expectation for sideway trading was wrong as GBP surged and hit an overnight high of 1.3174. The up-move appears to be running ahead of itself but there is room for extension towards 1.3200. At this stage, a clear break of this rather strong resistance seems unlikely (next resistance is at 1.3240). Support is at 1.3135 followed by 1.3100”.
“The strong rebound in GBP yesterday came as a surprise. While the ‘stop-loss’ for our bearish view at 1.3200 is still intact, the odds for further GBP weakness towards the 1.2970 target have diminished considerably. From here, GBP has to move and stay below 1.3100 within these 1 to 2 days or a break of 1.3200 would not be surprising. Looking further ahead, a break of 1.3200 would neutralize the current bearish momentum and suggest that GBP has moved into a sideway consolidation phase”.
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