FX Strategists at UOB Group noted Cable could re-visit the 1.25 region before coming under some selling pressure.
24-hour view: “The blast-off in GBP was clearly unexpected as it rocketed to a high of 1.2469 before ending the day higher by +1.93% (1.2441), the largest 1-day gain in 7 months. The rapid rally is deep in overbought territory but impulsive upward momentum suggests there is room for GBP to test 1.2500 first before easing off. Support is at 1.2370 followed by 1.2330”.
Next 1-3 weeks: “Our expectation for GBP to trade with a “downside bias towards 1.2140” (09 Oct, spot at 1.2225) was proven wrong quickly as it rocketed past the 1.2300 ‘strong resistance’ before ending the day higher by a whopping +1.93% (1.2441), the largest 1-day gain in 7 months. While the price action has clearly shifted the risk to the upside, there are several strong resistance levels that are stacked close to each other and any further advance may not be ‘smooth sailing’. The resistance levels are at 1.2530, 1.2550 followed by last month’s top near 1.2580. On the downside, a break of 1.2300 (‘strong support’ level) would indicate that GBP is not ready to challenge the resistance levels mentioned above just yet”.
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