Pound Sterling (GBP) is likely to trade sideways. Slight increase in upward momentum is not sufficient to indicate a sustained rise, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
A move toward 1.3635 is possible above 1.3595
24-HOUR VIEW: ” The following are excerpts from our update last Friday: ‘There has been a slight increase in upward momentum. Today, there is a chance for GBP to test the major resistance at 1.3595. A break above this level is not ruled out, but based on the current momentum, GBP is unlikely to be able to maintain a foothold above this level. Support is at 1.3550; a breach of 1.3535 would indicate that the current mild upward pressure has eased.’ The subsequent price movements did not turn out as expected. GBP traded in a sideways range of 1.3525/1.3578. Momentum indicators are turning flat, suggesting further sideways trading today, most likely between 1.3525 and 1.3575.”
1-3 WEEKS VIEW: “Last Monday (08 Sep, spot at 1.3480), we highlighted that ‘the current price movements are likely part of a broad range between 1.3430 and 1.3595.’ After GBP rose to a high of 1.3583 and closed at 1.3573 on Thursday, we indicated on Friday (12 Sep, spot at 1.3565) that ‘there has been a slight increase in upward momentum, but it is not sufficient to indicate a sustained rise just yet.’ We also indicated that GBP ‘must break and hold above 1.3595 before a move toward 1.3635 can be expected.’ We will continue to hold the same view as long as the ‘strong support’ level at 1.3510 is not breached.”