GBP/USD: Any advance is likely part of a higher range of 1.3325/1.3410 – UOB Group

Further Pound Sterling (GBP) strength still seems likely vs US Dollar (USD); any advance is likely part of a higher range of 1.3325/1.3410. In the longer run, GBP could continue to rise; based on the current momentum, it might find 1.3445 difficult to break, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP can continue to rise

24-HOUR VIEW: "After last Friday’s price movements, we indicated yesterday, Monday, that 'the underlying tone still seems firm, and there is a chance for GBP to test 1.3345.' We added, 'The major resistance at 1.3385 is unlikely to come into view.' While our directional call was correct, GBP not only tested 1.3345 but also breached 1.3385, reaching a high of 1.3403 before pulling back. Upward momentum has slowed with the pullback, but further GBP strength still seems likely. However, any advance is likely part of a higher range of 1.3325/1.3410. To put it another way, GBP is unlikely to break clearly above 1.3410 today."

1-3 WEEKS VIEW: "Last Wednesday (14 May, spot at 1.3300), we highlighted that 'the current price movements are part of a range trading phase, and GBP is likely to trade in a 1.3140/1.3405 range for now.' GBP subsequently traded well within the range. Yesterday (19 May, spot at 1.3300), we indicated that 'A 1.3200/1.3385 range may be enough to contain price movements in the near term.' We did not anticipate GBP to rise to 1.3403 before pulling back to close at 1.3363, up by 0.62%. The price action suggests GBP could continue to rise, but based on the current momentum, any advance might find the late April high of 1.3445 difficult to break. On the downside, if GBP breaks below 1.3290 (‘strong support’ level), it would mean that 1.3445 is not coming into view."