FX Strategists at UOB Group stay bearish on Cable in the near term, although further downside appears unlikely.
“GBP edged above the expected 1.2730/1.2800 consolidation range to touch a high of 1.2814. The subsequent sharp decline from the top was unexpected. While downward momentum is only beginning to pick up, there is scope for a move lower towards last Thursday’s low near 1.2690. Extension towards 1.2635 is not ruled out but the odds for such a move are not high, at least for today”.
“GBP touched a high of 1.2814 yesterday, just several pips below the stop-loss for our bearish view at 1.2820. While the rapid pullback from the high is encouraging for our view, GBP has to move and stay below 1.2730 or the odds for further GBP weakness towards the major 1.2560 level are still that as high as preferred. In the meanwhile, those who are holding short positions should continue to use 1.2820 as a stop-loss (to lower if and when there is a move below 1.2690)”.