Cable is seen advancing further north of the 1.25 mark and test the 1.2580 region in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “Instead of “trading sideways”, GBP rebounded strongly and recovered all of Monday’s loss as it touched a fresh 7-week high of 1.2528 (closed at 1.2497). While the rapid rally appears to be severely over-extended, it is too soon to expect a pull-back. From here, GBP could edge above 1.2530 but the next resistance at 1.2580 is likely out of reach for today (there is another strong resistance at 1.2550). Support is at 1.2465 followed by 1.2430. Yesterday’s low 1.2393 of is not expected to come back into the picture”.
Next 1-3 weeks: “We highlighted yesterday (17 Sep, spot at 1.2425) that despite the relatively deep pullback in GBP on Monday (16 Sep), we are holding on to our view that there is “room for GBP to test 1.2580”. The subsequent sharp rebound reinforces our view. That said, 1.2580 is a rather strong resistance and at this stage, the prospect for a clear break of this level is not that high. All in, the recovery phase that started about 2 weeks ago (05 Sep, spot at 1.2245) is deemed as intact until there is a break of 1.2350 (no change in ‘strong support’ level). On a shorter-term note, 1.2390 is already a strong support level”.
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