FX Strategists at UOB Group remain bullish on Cable in the near term, looking for a potential test of 1.2950.
“GBP extended its up-move as expected but did not have enough momentum to challenge the 1.2880 resistance (high of 1.2863). The undertone is still positive and a move above 1.2880 would not be surprising but the 1.2910 high seen on Monday is acting as a very strong resistance and is unlikely to be challenged. On the downside, only a move below 1.2800 would indicate that the current positive undertone has eased”.
“It has been more than a week since the ‘UK election’ rally and GBP is still holding below the peak near 1.2910. Upward momentum is beginning to show signs of slowing and this coupled with the current overbought conditions suggests an increasing risk of a short-term top. In other words, GBP has to break above 1.2910 soon or the risk of a top would continue to grow. In view of that, stop-loss is moved higher to 1.2760 from 1.2700”.