GBP/USD room for further upside – UOB

Cable could extend the upside momentum in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “After testing the bottom of our expected 1.4150/1.4210 consolidation (low of 1.4145), GBP staged a surprising strong rally that edged above last month’s 1.4244 top (overnight high of 1.4246). The rally appears to be running ‘too far, too soon’ but with no sign of weakness just yet, another push higher towards 1.4280 is not ruled out. At this stage, a sustained move above this level is not expected (next resistance is at 1.4310). Support is at 1.4190 followed by 1.4145”.

Next 1-3 weeks: “We highlighted that the “prospect for a move above last month’s 1.4244 peak has increased”. In line with expectation, GBP extended its advance and edged above 1.4244 to touch an overnight high of 1.4246. The subsequent strong daily closing in NY suggests GBP may have enough ‘fuel’ to make a run for the next resistance at 1.4280. This is a rather strong resistance and at this stage, the odds for a sustained move above this level are not high. Based on the current indications, a break above the year-to-date high of 1.4346 would come as a surprise. Overall, we continue to expect GBP to stay supported and only a break of 1.4145 (‘key support’ previously at 1.4110) would indicate that a short-term top is in place”.