Cable’s performance remains solid and a test of 1.3850 remains on the table in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘GBP could edge higher but it is unlikely to break the resistance at 1.3770’. We did not anticipate the surge in momentum that sent GBP soaring to 1.3834. The sharp and rapid advance appears to be overdone and GBP is unlikely to strengthen further. For today, GBP is more likely to trade sideways at these higher levels, expected to be within a 1.3765/1.3830 range.”

Next 1-3 weeks: “We have expected GBP to move higher since late last week. On Monday (18 Oct, spot at 1.3765), we highlighted that GBP ‘is likely to advance further to 1.3800’. We added, ‘further extension to 1.3850 is not ruled out but the odds are not high for now’. Our view was not wrong even though we did not quite expect the ease by which GBP took out 1.3800 (GBP rose to 1.3834 during London hours yesterday). GBP strength is still intact and as long as it does not breach 1.3720 (‘strong support’ level previously at 1.3665), an advance to 1.3850 would not be surprising. Looking ahead, the next resistance above 1.3850 is at 1.3915.”