Pound Sterling (GBP) is expected to rachet higher in an uneven manner between 1.2955 and 1.3030. In the longer run, further rise in GBP seems likely; modest increase in momentum suggests 1.3050 may not come into view so soon, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Further rise in GBP seems likely
24-HOUR VIEW: "GBP rose and tested the 1.3000 level two days ago. Yesterday, we highlighted the following: 'While the rapid rise appears overstretched, as long as 1.2955 (minor support is at 1.2970) is not breached, there is a chance for GBP to break above 1.3000. Given the overbought conditions, it might not be able to maintain a foothold above this level. The next resistance at 1.3050 is unlikely to come under threat.' GBP subsequently rose to 1.3005, pulled back sharply to 1.2953 and then rose back up to 1.3010. GBP closed at 1.3003, slightly higher by 0.10%. While the outlook for today is mixed after the sharp swings. That said, having breached 1.3000, the underlying tone seems firm. Today, we expect GBP to ratchet higher in an uneven manner between 1.2955 and 1.3030."
1-3 WEEKS VIEW: "Tracking the strong rise in GBP since early this month, in our most recent narrative from last Thursday (13 Mar, spot at 1.2955), we indicated that 'to continue to rise, GBP must break and remain above 1.3000.' Yesterday (18 Mar), GBP rose to 1.3010, closing marginally above 1.3000 (1.3003, +0.10%). While further rise in GBP seems likely, the modest increase in momentum suggests the next resistance at 1.3050 may not come into view so soon. Overall, only a breach of 1.2930 (no change in ‘strong support’ level from yesterday) would mean that GBP is not rising further."
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