Cable’s potential upside now looks somewhat trimmed, giving way to further consolidation in the short term instead, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our view from yesterday where the ‘bias is on the downside’ for GBP was incorrect as it whipsawed between 1.3524 and 1.3643. The rapid pullback from the high of 1.3643 during NY session appears to have room to extend but a clear break of 1.3500 is unlikely (there is another support at 1.3515). On the upside, a breach of 1.3605 (minor resistance is at 1.3580) would indicate that the current mild downward pressure has eased.”

Next 1-3 weeks: “Since the start of the week, we have held the view that there is a slim chance for GBP to push higher to 1.3645. Yesterday (10 Feb, spot at 1.3535), we highlighted that the chance for GBP to push higher to 1.3645 has diminished considerably. GBP subsequently dropped to 1.3524, surged to within a couple of pips of 1.3645 (high of 1.3643) before plummeting back down. The chance of GBP moving clearly above 1.3645 has dissipated but GBP does not appear to be ready to move lower in a sustained manner. From here, GBP is likely trade between 1.3450 and 1.3650.”