GBP/USD now shifted the focus to 1.3190 – UOB

FX Strategists at UOB Group noted that Cable could extend the move to 1.3190 in the next weeks.

Key Quotes

“The clear break above 1.3000 suggests the next up-leg has started and GBP/USD appears poised to crack the long-term declining trend line connecting the peaks of 1.7192 (Jul 2014) and 1.4377 (Apr 2018). The trend line at 1.3140 sits very close to the ‘inner boundary’ of trading envelope. In addition, at 1.3140, GBP/USD would have retraced about 50.0% of the decline from 1.4377 (Apr 2018) to 1.1959 (Sep 2019). In other words, 1.3140 is a strong and crucial long-term resistance level. If there is a break of 1.3140, the next resistance at 1.3190 is unlikely able to hold the advance in GBP/USD. Above 1.3190, there is hardly any resistance level of note until 1.3380 (followed by 1.3510).”

“Considering that the weekly RSI still has room to move higher before reaching overbought levels, the risk for the next few months is still for GBP/USD to strengthen further. However, depending on the manner of any advance, GBP/USD would likely reach overbought levels by the time it reaches the 1.3380/1.3510 resistance zone. In other words, the resistance zone may not be easy to break. In order to maintain the current impulsive momentum, GBP/USD should not move back below 1.2550. On a shorter-term note, 1.2770 is already a solid support level.”