GBP/USD: Extra gains need to clear 1.3600 – UOB

FX Strategists at UOB Group noted that further gains in GBP/USD are likely above the 1.3600 mark.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘could edge above 1.3560 before the risk of a pullback would increase’. We added, ‘the next resistance at 1.3600 is unlikely to come under threat’. The subsequent GBP strength exceeded our expectations as GBP rose to within one pip of 1.3600 (high of 1.3599) before dropping sharply. The sharp drop coupled with overbought conditions indicate that GBP is likely to consolidate for today, expected to be within a range of 1.3525/1.3595.”

Next 1-3 weeks: “On Tuesday (04 Jan, spot at 1.3480), we highlighted that GBP is likely to trade between 1.3370 and 1.3560. Yesterday, we indicated that if GBP closes above the major resistance at 1.3560, it would suggests that GBP is likely to advance to 1.3600 and above. GBP subsequently rose to 1.3599 before pulling back to close at 1.3556. Upward momentum has improved, albeit not by much. From here, it appears that GBP has to break 1.3600 before further advance is likely. The chance for GBP to break 1.3600 is not high for now but would remain intact as long as GBP does not move below 1.3460 within these few days. Looking ahead, the next resistance above 1.3600 is at 1.3630.”