FX Strategists at UOB Group reiterated that the next key resistance facing Cable is located at the key 1.30 mark.
24-hour view: “We expected GBP to “edge higher” yesterday but held the view “a sustained break of 1.2920 appears unlikely”. Instead of edging higher, GBP went on a rollercoaster ride as it soared to 1.2988, plunged back down to 1.2759 before rebounding quickly to end the day at 1.2892 (+0.52%). The wild swings have resulted in a mixed outlook and GBP could continue to trade in a volatile manner and within a broad range for today. On the upside, 1.3000 is a solid resistance (minor resistance is at 1.2955) and the prospect for a sustained rise above this level is not high. On the downside, a break below 1.2750 (minor support is at 1.2820) would suggest the current strong upward pressure has eased”.
Next 1-3 weeks: “We indicated yesterday (14 Oct, spot at 1.2820) that “the impulsive momentum could continue to carry GBP higher” but highlighted that “the next resistance of note is some distance away at 1.3000”. GBP traversed the ‘long distance’ within minutes as it rocketed to 1.2988 during London hours yesterday before retreating quickly. While further GBP strength is not ruled out, shorter-term conditions are severely overstretched and the solid 1.3000 level may temporarily cap the advance in GBP for the next couple of days. Support is at 1.2750 but only a break of 1.2655 (‘strong support’ was at 1.2630 yesterday) would indicate that the positive phase in GBP that started last Friday (11 Oct, spot at 1.2425) has run its course. Looking ahead, if GBP were to break above 1.3000, the next resistance is at 1.3050”.
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