In opinion of FX Strategists at UOB Group, Cable faces the prospects of further upside once 1.4235 is cleared in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘a break of the strong support at 1.4100 appears likely but GBP is unlikely to threaten the next support at 1.4055’. While our view was not wrong as GBP dipped to 1.4092, the subsequent strong surge came as a surprise (high has been 1.4220). The rapid rise appears to be running ahead of itself but there is room for GBP to test 1.4235. That said, a clear break of this level is unlikely (next resistance is at 1.4265). Support is at 1.4165 followed by 1.4140.”

Next 1-3 weeks: “Yesterday, we indicated that ‘downward momentum is beginning to improve and GBP could edge lower to 1.4055’. We added, ‘the chance for a sustained decline below 1.4055 is not high but it would increase further unless GBP moves above the ‘strong resistance’ level at 1.4180’. Our view was proven wrong as GBP surged past 1.4180 and hit a high of 1.4220. Strong shorter-term momentum suggests that GBP could test 1.4235 but GBP has to close above this major resistance before a sustained advance can be expected. In order to maintain the rapid build-up in momentum, any pullback in GBP should hold above 1.4110 (‘strong support’ level). Looking ahead, the next resistance levels above 1.4235 are at 1.4265 and 1.4290.”