GBP/USD: Bulls push to test the 1.2840 resistance – UOB Group

Instead of continuing to rise, the Pound Sterling (GBP) is more likely to trade in a range between 1.2740 and 1.2840. Downward momentum has slowed; any further GBP weakness is likely limited to a retest of the 1.2710 level, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP moves to 1.2840

24-HOUR VIEW: “While we expected GBP to weaken last Friday, we pointed out that ‘severely oversold conditions suggest any further decline is likely to be limited to a test of 1.2695.’ GBP did weaken, but after reaching a low of 1.2708, it turned around and surged to a high of 1.2840. GBP then closed at 1.2805 (+0.55%). The rapid rise appears to be overdone, and instead of continuing to rise, GBP is more likely to trade in a range today, probably between 1.2740 and 1.2840.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since 26 Jul, when it was trading at 1.2855. After GBP plunged last Thursday, in our update from last Friday (02 Aug, spot at 1.2735), we indicated that ‘while the price action seems to be overdone, further GBP weakness is not ruled out,’ and ‘the next level to monitor is 1.2645.’ GBP subsequently fell to a low of 1.2708 before soaring, almost breaking above our ‘strong resistance’ level of 1.2840 (high has been 1.2840). Downward momentum has slowed with the strong rebound. From here, while we continue to hold a negative GBP view, any further weakness is likely limited to a retest of the 1.2710 level. On the upside, the ‘strong resistance’ level remains unchanged at 1.2840. A breach of this level would mean that GBP is not weakening further.”