Cable is now expected to trade between 1.3820 and 1.4020 in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “While we held the view yesterday that ‘further sustained weakness in GBP is unlikely’, we expected GBP to ‘trade between 1.3780 and 1.3870’. The strong rebound that sent GBP soaring to 1.3937 came as a surprise. The rapid bounce appears to be running ahead of itself but there is room for GBP to test 1.3960 first before easing. The next resistance at 1.4020 is not expected to come into the picture. Support is at 1.3890 followed by 1.3860.”
Next 1-3 weeks: “We have held a negative view in GBP since early last week. After GBP plunged to 1.3791 last Friday, we noted yesterday (21 Jun) that ‘the rapid and sharp drop appears to be running ahead of itself and while there is room for GBP to weaken to 1.3750, this level may not come into the picture so soon’. However, we did not anticipate the sharp rebound in GBP that sent it surging by +1.03% (close of 1.3934), its largest 1-day advance since January. The break of our ‘strong resistance’ level at 1.3920 indicates that the weak phase has run its course. The current movement is viewed as the early stages of a consolidation phase and GBP is likely trade within a 1.3820/1.4020 range for now.”
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