FX Strategists at UOB Group stay neutral on Cable, adding that a consolidative phase is likely in the near term.
24-hour view: “We expected a higher GBP yesterday but were of the view that a sustained move above 1.4200 is unlikely. GBP briefly touched a high of 1.4233 before easing off. Despite the pull-back, the undertone remains positive and a move above the overnight high would not be surprising. That said, 1.4260 is a rather strong resistance and a clear break of this level seems unlikely. Support is at 1.4155 followed by 1.4125”.
Next 1-3 weeks: “We just shifted from a bullish to a neutral stance on GBP yesterday (30 Jan) and there is no change to the view. GBP dipped to a low of 1.3980 before staging a surprisingly strong rebound to hit a high of 1.4167. The rapid and sharp swing higher is viewed as part of a consolidation and not a resumption of the recent bullish phase. That said, in view of the elevated volatility, the “relatively broad range of 1.3930/1.4200” highlighted yesterday is probably not ‘broad enough’ to contain the consolidation phase. From here, GBP could continue to trade choppily, likely within a 1.3930/1.4290 range”.
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