Cable is now expected to move into a consolidation phase, likely between 1.2800 and 1.3100, suggested FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that ‘the rapid rise appears to be overdone and further sustained GBP strength appears unlikely’. We added, GBP ‘could drift downwards but any weakness is viewed as a lower trading range of 1.2890/1.3010 (a sustained decline below 1.2890 is not expected)’. GBP subsequently dropped to a low of 1.2866, snapped back up to 1.2998 before ending the day little changed at 1.2973 (+0.05%). The rapid bounce appears to have enough momentum to move above the 1.2998 high but for today, a rise beyond 1.3050 is highly unlikely (1.3025 is already quite a strong level). Support is at 1.2940 but only a break of 1.2895 would indicate the current upward pressure has eased.”
Two days on 15 Sep (spot at 1.2845), was highlighted the waning downward momentum and held the view that GBP ‘has to close below 1.2795 within these few days or prospect for further weakness would diminish quickly’. GBP easily cracked our ‘strong resistance’ level of 1.2950 yesterday as it soared to a high of 1.3008. The price action suggests that the negative phase that started earlier last week has likely made an interim low at 1.2763. From here, GBP could consolidate between 1.2800 and 1.3100 for a period of time before attempting to move below 1.2763. by Pablo Piovano