GBP/USD: Likely to trade in a 1.3140/1.3405 range – UOB Group
|Pound Sterling (GBP) could continue to rebound against US Dollar (USD), but any advance is likely limited to a test of 1.3340. In the longer run, buildup in momentum has faded; GBP is likely to trade in a 1.3140/1.3405 range, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Buildup in momentum has faded
24-HOUR VIEW: "GBP dropped to 1.3140 on Monday. Yesterday, Tuesday, when GBP was at 1.3180, we indicated that it 'could retest 1.3140 before a more sustained recovery can be expected.' However, GBP did not retest 1.3140. Instead, it rebounded directly to 1.3316, closing on a firm note at 1.3304, up by 0.96%. Today, GBP could continue to rebound, but as conditions are approaching overbought, any further advance is likely limited to a test of 1.3340. The major resistance at 1.3405 is not expected to come into view. Support is at 1.3275; a breach of 1.3245 would indicate that the current upward pressure has eased."
1-3 WEEKS VIEW: "We turned negative in GBP last Friday (09 May, spot at 1.3240), but we indicated that 'it is unclear whether GBP can break clearly below 1.3150.' After GBP dropped to 1.3140, we highlighted yesterday (13 May, spot at 1.3180) that GBP 'is expected to weaken, but the major support at 1.3070 may not come into view so soon.' We did not anticipate the subsequent sharp rebound to 1.3316. The breach of our ‘strong resistance’ level at 1.3275 indicated that the buildup in momentum has faded. The current price movements are likely part of a 1.3140/1.3405 range trading phase."
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