In opinion of FX Strategists at UOB Group, Cable could edge higher and re-visit 1.3800 ahead of 1.3850 in the short-term horizon.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the rapid advance appears to be running ahead of itself and GBP is unlikely to strengthen much further’ and we expected GBP to ‘trade between 1.3710 and 1.3780’. Our view was not wrong even though GBP traded within a narrower range than expected (1.3710/1.3765). The underlying tone has improved somewhat but while GBP could edge higher, it is unlikely to break the resistance at 1.3770. Support is at 1.3710 followed by 1.3690.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Oct, spot at 1.3765). As highlighted, GBP is likely to advance further to 1.3800. Further extension to 1.3850 is not ruled out but the odds are not high for now. Only a break of the ‘strong support’ at 1.3655 (no change in level from yesterday) would indicate that GBP is not ready to head higher to 1.3800.”