GBPUSD: Diminishing bets for a breakout of 1.2100 – UOB

The likelihood of an advance beyond 1.2100 in GBPUSD seems to be losing momentum, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Our view for GBP to “trade between 1.1680 and 1.1825” yesterday was incorrect as GBP surged to 1.2027, plummeted to 1.1792 before rebounding to close at 1.1868 (+0.92%). The sharp pullback amid overbought conditions suggests GBP is unlikely to strengthen further. For today, GBP is more likely to trade sideways between 1.1800 and 1.1950.”

Next 1-3 weeks: “On Monday (14 Nov, spot at 1.1795), we highlighted the solid upward momentum and held the view that there is room for the rally in GBP to extend to 1.1910, possibly 1.2000. Our view for the rally to extend turned out to be correct as GBP surged to a high of 1.2027 in NY trade before pulling back sharply. The pullback amid overbought conditions suggests GBP could consolidate for a couple of days first before making another push higher. However, the chance for a clear break of the next major resistance at 1.2100 does not appear to be high now. It is worth noting that 1.2027 is already a rather solid resistance level. On the downside, a break of 1.1750 would indicate that the rally in GBP is ready to take a breather.”