There is still scope for Cable to recede to the 1.3850 area in the next weeks, according to UOB Group’s FX Strategists.
24-hour view: “We expected GBP to ‘consolidate and trade within a 1.3920/1.4030 range’ yesterday. GBP traded between 1.3905 and 1.3999 before closing little changed at 1.3926 (+0.02%). Downward momentum has improved a tad and GBP could edge below last week’s low at 1.3890. In view of the lackluster momentum, any further decline is unlikely to threaten the major support at 1.3850. Resistance is at 1.3960 followed by 1.3990.”
Next 1-3 weeks: “There is not much to add to our update from last yesterday (01 Mar, spot at 1.3975). As highlighted, the current movement is viewed as the early stages of a corrective pullback. Any pullback is likely limited to a test of 1.3850 for now. On the upside, a break of 1.4050 (‘strong resistance’ level previously at 1.4110) would indicate the downside risk has dissipated.”
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