GBP/USD: a move to 1.3070 looks out of reach so far – UOB

According to FX Strategists at UOB Group, Cable is expected to advance beyond 1.30 but a test of 1.3070 looks unlikely for the time being.

Key Quotes

24-hour view: “We detected the improved underlying tone yesterday and highlighted that GBP ‘could test the 1.2980 resistance’. We added, ‘the next resistance is at 1.3000 followed closely by last month’s top at 1.3012’. The subsequent GBP strength exceeded our expectation as it popped above last month’s peak and touched 1.3014 before easing off slightly. While the rapid rise appears to be running ahead of itself, it is too soon to expect a pullback. From here, the current advance in GBP could extend towards 1.3040 before a more sustained more sustained pull-back can be expected. On the downside, support is at 1.2975 followed by 1.2955.”

Next 1-3 weeks: “GBP edged a couple of pips above last month’s peak of 1.3012 as it touched 1.3014 during NY hours. Despite the relatively strong daily closing (1.2998, +0.44%), upward momentum has not improved by all that much. While GBP appears to ready to move out the recent sideway-trading phase, lackluster momentum suggests 1.3070 many not come into the picture so soon. On the downside, a breach of 1.2925 (‘strong support’ level) would indicate the current mild upward pressure has eased.”