According to FX Strategists at UOB Group, further retracement in Cable appears to be losing momentum.
24-hour view: “Against our expectation for a test of 1.2195, GBP dropped quickly from 1.2172 to 1.2105 before recovering. The price action suggests GBP has moved into a consolidation phase. In other words, GBP is expected to trade sideways for today, albeit at a lower range of 1.2100/1.2165”.
Next 1-3 weeks: “While the ‘key resistance’ at 1.2195 is still intact (high of 1.2175 yesterday), shorter-term indicators continue to suggest that the odds for further GBP have diminished. As highlighted yesterday (19 Aug, spot at 1.2155), in order to ‘revive’ the current flagging downward momentum, GBP has to move and stay below 1.2070 soon or a break of 1.2195 would indicate that last week’s 1.2015 low is the extent of the ‘negative phase’ that started in late July (see annotations in the chart below). To put it another way, only a NY closing below 1.2070 would indicate that GBP is ready to challenge the next major support at 1.1985 (low in 2017)”.
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