Cable’s stance remains bearish and faces the probability that a short-term low is in place, according to FX Strategists at UOB Group.
24-hour view: “We expected a higher GBP yesterday and were of the view “further up-move towards 1.3570 would not be surprising”. GBP subsequently touched a high of 1.3569 before staging a surprisingly rapid decline to a low of 1.3473. The volatile price action has resulted in a mixed outlook and further choppy trading within a broad range seems likely. Expected range for today; 1.3470/1.3560”.
Next 1-3 weeks: “After edging below the January’s low of 1.3458 on Tuesday (15 May), GBP has been unable to make much headway on the downside. The lack of a follow-through and the subsequent sideway trading has resulted in a rapid loss in downward momentum. In order to revive the flagging momentum, GBP has to move and stay below 1.3470 within these 1 to 2 days or further consolidation around these levels would quickly increase the odds for a short-term low. Conversely, a move above the ‘stop-loss’ at 1.3600 would indicate that the current bearish phase has ended”.