Cable corrective upside could extend to the 1.3170 region in the next weeks, according to FX Strategists at UOB Group.
24-hour view: “GBP rocketed upon Barnier’s comment and took out last Friday’s peak of 1.3029 (overnight high of 1.3052). The rally appears to be running ahead of itself but there appears to be enough momentum for GBP to test the strong 1.3070 resistance first before it should settle down (next resistance at 1.3105 is likely out of reach). On the downside, only a break of 1.2965 would indicate that a short-term top is in place (minor support is at 1.2990)”.
Next 1-3 weeks: “GBP continues to trade in a volatile manner as it dropped to a low of 1.2898 yesterday before rocketing to hit an overnight high of 1.3052 (after Barnier’s comments). The overnight high was just above the top of our expected 1.2800/1.3050 consolidation range and the subsequent strong daily closing in NY suggests there is room for further GBP gains. That said, it is too soon to expect a shift to a bullish phase even though GBP could test 1.3170 from here. For now, we view any strength as a corrective rebound and not the start of a sustained up-move. On the downside, only a break of 1.2900 would indicate that the prevalent upward pressure has eased”.
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