FX Strategists at UOB Group now see Cable within the 1.4100/1.4200 range in the next weeks.

Key Quotes

24-hour view: “Our expectation for the rally in GBP to ‘test 1.4235 first before easing’ was incorrect as it rose to 1.4200 before selling off sharply to an overnight low of 1.4100. Despite the relatively sharp decline, downward momentum has not improved by much. That said, the decline could dip to 1.4075 first before stabilizing. The next support at 1.4040 is unlikely to come under threat. Resistance is at 1.4150 followed by 1.4175.”

Next 1-3 weeks: “We have held a positive view in GBP since early last week. Yesterday (19 May, spot at 1.4195), we highlighted that ‘a break of the major resistance at 1.4235 would shift the focus to 1.4290’. The sharp sell-off during NY session that sent GBP tumbling to 1.4100 came as a surprise. The 1.4100 level is our ‘strong support’ and while it is still not clearly breached, the rapid loss in momentum indicates that the positive phase has come to an end. From here, GBP is deemed to have moved into a consolidation and could trade within a broad range of 1.4000/1.4200 for a period of time.”