In opinion of FX Strategists at UOB Group, the prospects for Cable breaking below 1.3760 appear diminished for the time being.
24-hour view: “We highlighted yesterday that ‘the rebound appears to be running ahead of itself, further GBP strength appears unlikely’ and we expected GBP to ‘trade between 1.3700 and 1.3780’. Our view was not wrong even though GBP traded within a slightly narrower range than expected (1.3697/1.3770). The underlying tone has improved somewhat and this could lead to GBP edging upwards even though the major resistance at 1.3810 is unlikely to come under threat (there is another resistance at 1.3780). Support is at 1.3725 followed by 1.3695.”
Next 1-3 weeks: “Yesterday (12 Apr, spot at 1.3705), we noted that ‘downward momentum has not improved by much but a clear break of 1.3670 is not ruled out’. We added, ‘any further weakness is expected to struggle to move below the next support at 1.3640’. GBP subsequently dropped to 1.3670 before rebounding strongly to 1.3776. While our ‘strong resistance’ level at 1.3780 is still intact, downward momentum has waned and the prospect for a break of 1.3670 has diminished. For now, GBP is more likely to trade between 1.3670 and 1.3810.”