GBP/USD: A visit to 1.1300 appears unlikely for now – UOB

Further upside in GBP/USD looks on the cards, although another visit to 1.1300 seems out of favour for the time being, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “The strong surge in GBP came as a surprise (we were expecting range-trading).  GBP closed on a strong note at 1.1119 (+2.13%) and continues to advance in early Asian trade. The rapidly improving upward momentum suggests GBP could continue to rise. That said, conditions are overbought and a break of 1.1300 is unlikely (there is another resistance at 1.1250). On the downside, a breach of 1.1050 (minor support is at 1.1100) would indicate that the current upward pressure has subsided.”

Next 1-3 weeks: “Yesterday (29 Sep, spot at 1.0825), we noted downward momentum has waned and we were of the view that the probability of GBP dropping to 1.0000 has diminished considerably. That said, we did not quite expect the strong surge as GBP soared by 2.13% and closed at 1.1119 in NY. The breach of our ‘strong resistance’ level 1.1000 indicates that the weakness in GBP from more than 2 weeks ago (see annotations in the chart below) has bottomed for now. The current strong rebound has scope to extend but at this stage, the resistance at 1.1300 is unlikely to come under challenge. Overall, only a breach of 1.0800 (‘strong support’ level) would indicate that the rapid build-up in short-term momentum has eased.”