In opinion of FX Strategists at UOB Group, Cable now faces further consolidation within the 1.3730-1.3885 range in the next weeks.
24-hour view: “Our view for GBP to ‘trade sideways within a 1.3800/1.3860 range’ was incorrect. GBP surged to a high of 1.3913 during NY session but the advance was short-lived as it plummeted back down to 1.3804. The sharp and rapid decline from the overnight high has room to extend lower but a clear break of the support at 1.3760 is unlikely (minor support is at 1.3780). Resistance is at 1.3830 followed by 1.3860. The 1.3913 high is not expected to come into the picture.”
Next 1-3 weeks: “We highlighted yesterday (14 Sep, spot at 1.3835) that ‘as long as 1.3760 is not breached, GBP could stage another attempt to move to 1.3890’. We added, ‘GBP has to close above 1.3910 before a sustained advance can be expected’ and that ‘the prospect for GBP to close above 1.3910 is not high’. While our over view for GBP to test 1.3890 was not wrong, we did not anticipate the rapid manner by which GBP surged to 1.3913 during NY session and the subsequent sharp sell-off (GBP closed lower by -0.23% at 1.3808). Upward pressure has dissipated and the current movement is viewed as part of a consolidation phase. From here, GBP could trade between 1.3730 and 1.3885 for a period of time.”
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