In opinion of FX Strategists at UOB Group, extra upside in Cable is expected on a break above the 1.2380 level.
24-hour view: “GBP traded between 1.2284 and 1.2366 yesterday, wider than our expected 1.2290/1.2360 range before ending the day little changed at 1.2333 (+0.04%). The relatively quiet sideway trading over the past few days appears to be close to ending. While GBP could continue to trade sideways between 1.2280 and 1.2380 for now, a clear break 1.2380 could lead to a rapid rise to 1.2420. Conversely, a break below 1.2280 could lead a retest of the Monday’s (09 Sep) low near 1.2235”.
Next 1-3 weeks: “GBP had another quiet day yesterday and closed little changed in NY. After rising to 1.2385 on Monday (09 Sep), GBP has not been able to make much headway on the upside. As highlighted on Wednesday (11 Sep, spot at 1.2355), “shorter-term momentum indicators appear to be stalling and the prospect for further GBP strength has diminished”. For now, we are not ruling out further GBP strength but we continue to wait for a ‘confirmation’ of a NY close above 1.2380 before expecting GBP to move to 1.2450. On the downside, a break of 1.2235 (no change in strong support level) would indicate the rebound from last week has run its course. Shorter-term indicators (see 24-hour view above) suggest GBP could be ready to move out the ‘range trading phase’ over the past few days”.
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