Cable risks a move to the 1.2900 handle in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The fact that GBP stayed at the top of our expected 1.2915/1.3050 range tells us that a base may be forming just under 1.3000. To cement the view, GBP would need to take out 1.3070 convincingly. Above that, 1.3100 is another strong resistance. On the downside, 1.3000 supports and only a move below 1.2970 would indicate that the upward pressure has eased.”

Next 1-3 weeks: “Our previous rhetoric was that GBP “risks breaking bottom of 1.3000/1.3300 range”. Overnight (13-Jan), GBP took out 1.3000 convincingly and traded to a low of 1.2961 before closing at 1.2987. The subsequent buildup of downside pressures means that GBP is ready to take on Dec’s lows at 1.2900 next. All in, GBP is expected to stay under pressure with resistance at 1.3065 and a strong close above 1.3130 would “neutralize” the current downward pressure”.

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