GBP/USD: Rally could extend to 1.2665 – UOB

In light of the recent price action, GBP/USD could extend the uptrend to the 1.2660 region in the next few weeks, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “We expected GBP to ‘break above 1.2600’ last Friday but we held the view that ‘the major resistance at 1.2665 is unlikely to come into view’. Our expectations turned out to be correct as GBP rose to a high of 1.2653. While upward momentum has waned somewhat, there is room for GBP to test 1.2665 before the risk of a pullback increases. The next resistance at 1.2720 is not expected to come under threat. Support is at 1.2605; a breach of 1.2580 would indicate that GBP is not advancing further.”

Next 1-3 weeks: “Last Friday (05 May, spot at 1.2575), we highlighted that GBP ‘is likely to ratchet higher towards the major resistance at 1.2665’. We added, ‘At this stage, the odds for a sustained rise above this level are not high’. Our view of a higher GBP was not wrong even though we did not quite expect the rapid advance as GBP rose quickly to a high of 1.2653. Upward momentum is improving and GBP could break above 1.2665. The next resistance above 1.2665 is at 1.2720. The upside risk is intact as long as GBP stays above 1.2540 (‘strong support’ level was at 1.2470 last Friday).”