Pound Sterling (GBP) may check 1.3610 earlier than leveling off; the following resistance at 1.3650 is unlikely to be threatened. Within the longer run, outlook for GBP stays constructive, however the subsequent resistance at 1.3650 is unlikely to become visible so quickly, UOB Group’s FX analysts Quek Ser Leang and Peter Chia notice.
Outlook for GBP stays constructive
24-HOUR VIEW: “Subsequent to the robust advance in GBP early this week, we highlighted yesterday that ‘the sharp rise over the previous couple of days seems to be overdone, and as an alternative of continuous to advance, GBP is extra more likely to consolidate right now, in all probability between 1.3475 and 1.3535.’ Our view of consolidation was incorrect, as GBP continued to rise, reaching a excessive of 1.3585. The advance nonetheless seems to be overextended, however upward momentum shouldn’t be displaying indicators of easing simply but. Immediately, GBP may check 1.3610 earlier than leveling off. The subsequent resistance at 1.3650 is unlikely to be threatened. To maintain the overbought momentum, GBP should maintain above 1.3530, with minor assist at 1.3555.”
1-3 WEEKS VIEW: “Two days in the past (22 Jul, spot at 1.3485), we indicated that GBP ‘is more likely to commerce in a spread between 1.3415 and 1.3535.’ After GBP rose to a excessive of 1.3434, we identified yesterday (23 Jul, spot at 1.3520) that ‘a transparent break above 1.3535 would point out that GBP may rise to 1.3575.’ We didn’t anticipate the fast build-up in momentum, as GBP not solely rose above 1.3535, but additionally 1.3575 (excessive has been 1.3585). Though the outlook for GBP stays constructive, short-term circumstances are deeply overbought, and the following resistance at 1.3650 is unlikely to become visible so quickly. Word that there’s one other resistance degree at 1.3610. Total, solely a breach of 1.3490 (‘robust assist’ degree was at 1.3455 yesterday) would point out that the present upward strain has eased.”
