GBP/USD: Extra gains look likely above 1.2400 – UOB

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, GBP/USD could see its gains accelerated on a close above 1.2400.

Key Quotes

24-hour view: “Our view for GBP yesterday was that it ‘is likely to test the major resistance at 1.2340 but it is unlikely to maintain a foothold above this level’. Our view was not wrong even though GBP strengthened more than expected, rising to 1.2348 before settling on a firm note at 1.2341 (+0.44%). Despite the advance, there is no significant improvement in upward momentum. However, there is room for GBP to rise to 1.2370 before the risk of a pullback increases. The next resistance at 1.2400 is unlikely to come into view. On the downside, a breach of 1.2290 (minor support is at 1.2310) would indicate that GBP is not advancing further.”

Next 1-3 weeks: “Two days ago (27 Mar, spot at 1.2240), we held the view that the recent GBP strength has ended and we expected GBP to trade in a range of 1.2140/1.2340. Yesterday, GBP rose slightly above the top of the expected range (high of 1.2348). Upward momentum appears to be building, albeit tentatively. In order for GBP to advance in a sustained manner, it has to break and stay above 1.2400. The likelihood of a clear break of 1.2400 is not high for now but it will remain intact as long as GBP stays above 1.2240 in the next few days. Looking ahead, the next resistance above 1.2400 is a solid level at 1.2450.