The British Pound Sterling (GBP) has exhibited a strong upward movement, potentially extending to 1.2970 before a pullback, according to UOB Group FX analysts Quek Ser Leang and Peter Chia. Despite overbought conditions, the upside risk remains intact, though reaching 1.3000 might not happen immediately.
Upside Risk Above 1.2855
24-Hour View: “While we expected GBP to break above 1.2860 yesterday, we anticipated that the next major resistance at 1.2900 would not come into view. Contrary to our expectations, GBP surged to a high of 1.2949. Despite being overbought, GBP could advance to 1.2970 before a pullback. The major resistance at 1.3000 is unlikely to be reached soon. A break below 1.2880 (with minor support at 1.2900) would indicate that the current upward pressure has eased.”
1-3 Weeks View: “Last Thursday (04 Jul, spot at 1.2745), we indicated that the risk for GBP had shifted to the upside. Following GBP’s rise, we updated yesterday (11 Jul, spot at 1.2845) that the price action continues to suggest upside risk, with the next level to monitor being 1.2900. GBP quickly surpassed 1.2900, reaching a high of 1.2949 in New York trading. Although the risk remains on the upside, overbought conditions imply that 1.3000 might not be reached soon. The upside risk is intact as long as 1.2855 (previous ‘strong support’ at 1.2775) is not breached.”
In summary, the GBP has demonstrated a stronger than expected advance, but overbought conditions suggest a potential pullback. The critical levels to watch are 1.2970 for a possible peak before a retracement and 1.2855 as a support level that, if breached, would indicate a reduction in upward pressure.
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