GBP/USD targets 1.3190 – UOB

GBP/USD targets 1.3190 – UOB

FX Strategists at UOB Group suggested that GBP/USD could now extend the upside to the 1.3190 area in the next weeks.

"24-hour view: While our view for GBP to strengthen was not wrong, the pace and the extent of the advance came as a surprise. GBP blew past several strong resistance levels with ease and hit a high of 1.3120. Strong upward momentum suggests there is scope for GBP to move above the major mid- to long-term resistance at 1.3140. That said, any further advance is likely to exhaust itself before the next resistance at 1.3190. On the downside, 1.3055 is expected to be strong enough to hold any intraday pull-back (minor support is at 1.3075).

Next 1-3 weeks: While our view for ‘GBP to advance’ from yesterday (04 Dec, spot at 1.2995) was correct, our expectation that ‘1.3070 may not come into the picture so soon’ was wrong. The sudden and rapid acceleration in momentum led to GBP surging to an overnight high of 1.3120. From here, all eyes are at the long-term resistance of 1.3140 (declining trend line on the weekly chart). In view of the vastly improved momentum, a break of this level would not be surprising and would shift the focus to the next resistance at 1.3190 (above this level there is hardly any resistance level of note until 1.3380). On the downside, the ‘strong support’ level has moved markedly higher to 1.2995 from yesterday’s level of 1.2925. On a shorter-term note, 1.3055 is already a strong level.”