GBP/USD could break above 1.2900 – UOB

Further upside could motivate GBP/USD to challenge and even surpass the 1.2900 yardstick, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: Yesterday, we held the view that GBP “could rise to 1.2865 before the current strong upward pressure might ease”. We stated, “support is at 1.2805, followed by 1.2780”. In London, GBP fell sharply but briefly to 1.2751 and then rebounded strongly to 1.2869. Despite the advance, upward momentum has not increased much. That said, there is room for GBP to rise further even though 1.2950 is unlikely to come into view (there is another resistance at 1.2900). On the downside, 1.2800 is strong support now (minor support is at 1.2835). 

Next 1-3 weeks: We highlighted yesterday (10 Jul, spot at 1.2830) that “while the risk for GBP has shifted to the upside, it must break and stay above 1.2850 before an advance to 1.2900 is likely.” GBP rose to 1.2869 in NY before closing at 1.2860 (+0.15%). In view of the improved momentum, GBP is likely to break above 1.2900. Further advance above 1.2900 is not ruled out, but 1.3000 may not come into view so soon. The upside risk is intact as long as GBP stays above 1.2750 (‘strong support’ level was at 1.2735 yesterday).