FX Strategists at UOB Group have shifted their outlook on Cable to bullish from neutral, expecting it to test the key barrier at 1.3200 the figure in the next weeks.
“While we held a positive view on GBP last Friday, the ease of which successive strong resistances were taken out comes as a surprise (high has been 1.3113, highest level since September last year). The rally is clearly overbought but there is scope for further extension to 1.3150. This is a very strong resistance and a clear break above this level seems unlikely for now (next resistance at 1.3200). On the downside, only a move back below 1.3070 would indicate that the strong upward pressure has eased”.
“While we highlighted last Friday that GBP has to move above 1.3000 to indicate that it has moved into a bullish phase, the ease of which this level was taken out and the subsequent strong surge that hit a high of 1.3113 was unexpected. The outlook for GBP has shifted to bullish even though the rally appears to be running ahead of itself and the pace of any up-move is likely to be slower. There is a strong resistance at 1.3150 and a move above this level would shift the focus to the target at 1.3200. In view of the overbought conditions, those looking to buy may like to wait for a dip to 1.3070/75 to initiate long with 1.3020 as a stop-loss”.
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