GBP/USD: The pair is to retest 1.2780 – UOB Group

Room for the Pound Sterling (GBP) to retest the 1.2780 level before a pullback can be expected. Risk for GBP has shifted to the upside, but note that there is a solid resistance level at 1.2805, UOB Group analysts Quek Ser Leang and Peter Chia note.

Solid resistance exists at 1.2805

24-HOUR VIEW: “While we expected GBP to rebound further yesterday, we indicated that ‘given that conditions are approaching overbought levels, any advance is unlikely to be able to break above the major resistance at 1.2720.’ However, GBP not only broke above 1.2720, but also soared further to 1.2777. GBP eased off from the high and closed at 1.2744 (+0.46%). Conditions remain overbought, but there is room for GBP to retest the 1.2780 level before a pullback can be expected. The next resistance at 1.2805 is unlikely to come into view. On the downside, if GBP breaks below 1.2695 (minor support is at 1.2725), it would indicate that the upward momentum has eased.

1-3 WEEKS VIEW: “We indicated on Tuesday (02 Jul, spot at 1.2645) that the current price movements are likely part of a consolidation phase. We held the view that GBP ‘is likely to trade between 1.2600 and 1.2720 for now.’ Yesterday, GBP took off and broke clearly above 1.2720. While the risk has shifted to the upside, it is worth noting that there is a solid resistance level at 1.2805, ahead of last month’s high of 1.2860. To keep the momentum going, GBP must not break below 1.2665.”