Cable’s upside bias stays everything but abated for the time being, suggested FX Strategists at UOB Group.
24-hour view: “Expectation for consolidation was wrong as GBP extended its recent gains and hit a high of 1.4345. While clearly overbought, there is no sign of weakness just yet and GBP could grind higher even though a sustained break of 1.4400 would be surprising (minor resistance is at 1.4370). On the downside, only a move back below 1.4270 would indicate that a short-term top is in place. Minor support is at 1.4300”.
Next 1-3 weeks: “While we have held a positive GBP view since early last week, the pace of the advance since then came as a surprise (note that GBP closed higher for the 7th straight day yesterday). We that “another ‘up-leg’ could not be ruled out even though the year-to-date peak of 1.4346 is likely out of reach”. GBP subsequently rallied to a high of 1.4345 during NY hours and in view of the vastly improved momentum, it appears that we have to contend with further GBP strength for now. From here, a break above last year’s 1.4346 high would shift the focus towards the next resistance at 1.4400 followed by 1.4460. On the downside, the ‘key support’ has moved higher to 1.4230 from 1.4145 previously and only a break of this level would indicate that a short-term top is in place”.
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