FX Strategists at UOB Group remain neutral on Cable although another leg lower is not ruled out.
“We highlighted that the “prospect for a move above last month’s 1.4244 peak has increased”. We followed-up on Friday (13 Apr, 1.4230) by indicating that GBP “may have enough fuel to make a run for 1.4280” but noted that the odds for a sustained move 1.4280 are not high. GBP subsequently rose to a high of 1.4296 during NY hours last Friday before easing off. While the prospect for a sustained rally is still not high, the rapidly improving momentum suggests that another ‘up-leg’ could not be ruled out even though the year-to-date peak of 1.4346 is likely out of reach (1.4310 is already quite a strong resistance)”.
“From a shorter-term perspective, the current rally is at ‘over-stretched’ levels and in order to maintain the current impetus, GBP should continue to advance quickly as a consolidation at these overbought levels would lead to a rapid loss in momentum. Overall, we expect GBP to stay supported and only a clear break below the ‘key support’ at 1.4145 (level unchanged) would indicated that a short-term top is in place. Minor support is at 1.4205”.