GBP/USD: Focus now shifts to 1.2900 – UOB

In the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, extra gains could lift GBP/USD to the 1.2900 region in the next few weeks.

Key Quotes

24-hour view: We expected GBP to “rise further” last Friday. However, we indicated, “in view of the severely overbought conditions, it is unlikely to challenge 1.2850.” GBP rose as expected even though it came close to taking out 1.2850 (high has been 1.2849). While conditions remain overbought, GBP could edge above 1.2850 today, but it is unlikely able to maintain a foothold above this level. The next major resistance at 1.2900 is not expected to come into view. Support is at 1.2800, followed by 1.2770. 

Next 1-3 weeks: We have held a positive GBP view for more than a week now. In our most recent narrative from last Friday (16 Jun, spot at 1.2780), we indicated that “GBP strength is intact and the next level to aim for is 1.2900.” There is no change in our view. On the downside, a breach of 1.2700 (‘strong support’ level was at 1.2600 last Friday) indicates that the GBP strength has ended.