In light of the strong upside momentum, Cable could now advance to the key 1.40 mark and above in the next weeks.
24-hour view: “We highlighted yesterday that ‘downward pressure has eased and GBP is unlikely to weaken further’ and we were of the view that GBP ‘is likely to consolidate and trade between 1.3830 and 1.3905’. However, GBP lifted off and blew past 1.3905 as it surged to an overnight high of 1.3986. While the rapid rise is overbought, GBP could edge above 1.4000 first before a pullback can be expected. For today, the next resistance at 1.4050 is unlikely to come into the picture. Support is at 1.3945 followed by 1.3920.”
Next 1-3 weeks: “We have held a positive view in GBP for more than a week now. After GBP retreated sharply from 1.3955, we highlighted on Wednesday (17 Feb, spot at 1.3885) that ‘upward momentum has been dented and the odds for GBP to extend its gains to the next resistance at 1.4000 are not high’. We added, ‘unless GBP can move and stay above 1.3925 within these 1 to 2 days, a break of the ‘strong support’ at 1.3820 would indicate that the current GBP strength has run its course’. GBP subsequently dropped to 1.3830 but yesterday (18 Feb), it took off and surged to 1.3986. The strong boost in momentum suggests GBP could crack 1.4000 and head towards 1.4050. On the downside, the ‘strong support’ level has moved higher to 1.3870 from 1.3820. A break of the ‘strong support’ would indicate that the current GBP strength has run its course.”
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