Cable could now be headed towards the 1.3900 area in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “While we expected GBP to strengthen yesterday, we were of the view that ‘1.3800 is likely out of reach’. The subsequent advance exceeded our expectations as GBP soared to 1.3833. The rapid rise appears to be running ahead of itself but GBP could test 1.3860 first before easing. For today, the advance in GBP is unlikely to challenge the major resistance at 1.3900. Support is at 1.3800 followed by 1.3775.”
Next 1-3 weeks: “We have expected GBP to trade within a 1.3600/1.3830 range since late last week. That said, we detected an improvement in shorter-term momentum and yesterday (26 Jul, spot at 1.3755), we highlighted that ‘a break of 1.3830 is not ruled out but GBP is unlikely able to maintain a foothold above this level’. We did not anticipate the subsequent strong rise during NY hours to a high of 1.3833. Upward momentum has improved further and GBP is expected to trade with an upward bias towards 1.3900. At this stage, the prospect for a sustained rise above 1.3900 is not high. On the downside, a breach of 1.3740 (‘strong support’ level) would indicate that GBP is not ready to head higher just yet.”
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