GBP/USD: Chance of rising to 1.3575 – UOB Group
Pound Sterling (GBP) is likely to consolidate between 1.3475 and 1.3535 against US Dollar (USD). In the longer run, a clear break above 1.3535 would indicate that GBP could rise to 1.3575, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Above 1.3535, GBP can rise to 1.3575
24-HOUR VIEW: "GBP rose sharply two days ago. Yesterday, while we held the view that GBP 'could strengthen further', we indicated that 'overbought conditions suggest that any advance could be limited to a test of 1.3535.' We added, 'a clear break above this level is unlikely.' We pointed out that 'to sustain the overbought momentum, GBP must hold above 1.3450, with minor support at 1.3470.' Our view turned out to be correct, as after dipping to a low of 1.3463, GBP rose to a high of 1.3534. The sharp rise over the past couple of days appears to be overdone, and instead of continuing to advance, GBP is more likely to consolidate today, probably between 1.3475 and 1.3535."
1-3 WEEKS VIEW: "After holding a negative GBP view since early this month, we revised our view to neutral yesterday (22 Jul, spot at 1.3485). We indicated that 'the outlook for GBP has shifted from negative to neutral, and it is likely to trade in a range between 1.3415 and 1.3535.' We pointed out that 'given the buildup in short-term momentum, the risk of GBP breaking above 1.3535 is higher, potentially paving the way for a more sustained advance.' GBP subsequently rose to a high of 1.3534. From here, a clear break above 1.3535 would indicate that c. The likelihood of GBP breaking clearly above 1.3535 will remain intact as long as the ‘strong support’ level, currently at 1.3455, is not breached."
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