Pound Sterling (GBP) is likely to trade in a 1.3515/1.3575 range. In the longer run, there is a chance for GBP to retest 1.3615 before the risk of a more sustained and sizeable pullback increases, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
GBP to retest 1.3615 before a sustained and sizeable pullback
24-HOUR VIEW: "Following the brief rise in GBP to 1.3616 last Thursday, we noted that 'the brief rise above 1.3600 did not result in any increase in upward momentum.' However, we pointed out that 'the firmer underlying tone suggests GBP could retest the 1.3615 level before a pullback is likely'. GBP did not retest 1.3615 but dropped to 1.3508 before rebounding. Despite the decline, there has been no clear increase in downward momentum, and GBP is unlikely to weaken much further. Today, GBP is more likely to trade in a 1.3515/1.3575 range."
1-3 WEEKS VIEW: "The following are excerpts from our update last Friday (06 Jun, spot at 1.3575): 'While the slight increase in upward momentum is not enough to indicate a sustained advance just yet, as long as the ‘strong support’ at 1.3500 is not breached, GBP could edge higher. That said, given the current momentum, any advance may not be able to break clearly above 1.3655.' During the NY session, GBP dropped to a low of 1.3508. The price action has led to a slowdown in momentum, but as long as 1.3500 is not breached, there is a chance for GBP to retest 1.3615 before the risk of a more sustained and sizeable pullback increases. The 1.3655 level is unlikely to come into view."
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