FX Strategists at UOB Group are now neutral on Cable, adding that the current upside could extend further.

Key Quotes

24-hour view: “Instead of trading sideways (as expected yesterday), GBP surged to hit an overnight high of 1.3929. Despite the pullback from the high, the undertone is still positive and there is scope for further advance towards 1.3950. The next resistance at 1.3990 is a major level and is unlikely to be challenged, at least not for today. On the downside, only a move back below 1.3830 would indicate that the immediate upward pressure has eased (minor support is at 1.3860)”.

Next 1-3 weeks: “While we highlighted the diminished odds for further GBP weakness yesterday, the strong surge higher that easily took out the ‘stop-loss’ for our bearish view at 1.3890 came as a surprise (high has been 1.3929). GBP has likely made a temporary low at 1.3712 last week and the current recovery has room to extend higher. That said, there are several rather strong resistance levels at 1.3990, 1.4030 and 1.4070. Despite the current positive undertone, we expect GBP to struggle to move clearly above these strong resistance levels. On the downside, only a move back below 1.3800 would indicate that current mild upward pressure has eased”.