Cable’s upside momentum carries the potential to re-test the mid-1.3900s in the short-term horizon, suggested FX Strategists at UOB Group.
24-hour view: Our expectation for GBP to move above 1.3915 yesterday did not materialize as it dropped to 1.3845 before snapping back up to 1.3912. The underlying tone still appears to be a tad firm and we continue to see chance for GBP to move above 1.3915. Barring a strong surge in momentum, the next resistance at 1.3955 is likely out of reach. On the downside, a breach of 1.3850 (minor support is at 1.3875) would indicate that the current mild upward pressure has eased.”
Next 1-3 weeks: “There is not much to add to our update from yesterday (28 Jul, spot at 1.3880). As highlighted, there is room for GBP to advance further but overbought shorter-term conditions suggest that 1.3955 may not come into the picture so soon. The positive outlook is deemed intact as long as GBP does not move below 1.3800 (‘strong support’ level was at 1.3770 yesterday). Looking ahead, a clear break of 1.3955 would shift the focus to 1.4000.”