GBP/USD could advance to the 1.3250 level near-term – UOB

Cable could extend its gains to the mid-1.3200s in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden and sharp lift-off in GBP that sent it rocketing to a high of 1.3177 came as a surprise. While GBP could strengthen further, severely overbought conditions is likely to lead to a slower pace of advance and the next resistance at 1.3220 could be out of reach for now (minor resistance is at 1.3180). Support is at 1.3085 but only a break of 1.3050 would indicate the current strong rally is ready to take a breather.”

Next 1-3 weeks: “We have held the view that GBP ‘is likely to trade on a slightly defensive mode with 1.3050 acting as a strong resistance’ since last Friday (16 Oct). After trading in a quiet manner for a few days, GBP took off, blew past 1.3050 and hit a high of 1.3177 yesterday (21 Oct) before closing higher by a whopping +1.54% (its biggest 1-day gain in 7 months). While the rapid rally appears to be running ahead of itself, upward momentum has clearly improved. From here, there is room for further GBP strength towards 1.3250 but it is left to be seen if GBP can maintain a foothold above this level. Support is at 1.3050 but only a break of 1.2990 would indicate that GBP is not ready for 1.3250 just yet.”