Cable could extend the rally to the mid-1.3400s in the next weeks.

Key Quotes

24-hour view: 'Further gains are not ruled out but overbought conditions suggest a slower pace of advance and the resistance at 1.3410 could be out of reach’. Our view was not wrong as GBP rose to an overnight high of 1.3396 before easing off to close at 1.3370 (+0.15%). While conditions are overbought, GBP appears to have enough momentum to test the resistance at 1.3410 first before a pull-back should ensue. For today, the next resistance at 1.3450 is unlikely to come into the picture. Support is at 1.3300 followed by 1.3300.”

Next 1-3 weeks: “We noted last Friday (28 Aug, spot at 1.3210) that GBP ‘could continue to trade in a choppy manner between the two major levels of 1.3000 and 1.3300’. We added, ‘only a clear break of either one of the two levels would indicate the start of a more sustained directional move’. That said, we did not anticipate the manner by which GBP vaulted to a high of 1.3357 before closing sharply higher at 1.3350 (+1.15%). While the advance appears to be running ahead of itself, robust momentum indicates further GBP strength is likely. From here, GBP could strengthen towards 1.3450, albeit likely at a slower pace. All in, the current positive phase in GBP is deemed as intact as long as it holds above the ‘strong support’ level of 1.3220.”