In opinion of FX Strategists at UOB Group, Cable could still extend the recovery in the short-term horizon.
24-hour view: “The strong rally in GBP that resulted in a whopping gain of +2.84% (NY close of 1.2210) came as a surprise. Upward momentum remains robust and while overbought, the current rally could extend towards 1.2330. The next resistance at 1.2400 is likely out of reach. Support is at 1.1.2150 followed by 1.2050.”
Next 1-3 weeks: “The outsized surge of +2.84% (NY close of 1.2210) came as a surprise. The breach of our 1.2150 ‘strong resistance’ indicates that the sell-off earlier this month is ready to take a breather. To look at it another way, last Friday’s (20 Mar) 1.1413 low is deemed as a short-term bottom. The current recovery has scope to extend higher but at this stage, the prospect for a move beyond 1.2550 is not high. On the downside, 1.1880 (‘strong support’ level) is expected to be strong enough to hold, at least for one week or so.”
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