Likely to trade in a range between 1.3440 and 1.3520 – UOB Group

Pound Sterling (GBP) is likely to trade in a range between 1.3440 and 1.3520. In the longer run, further GBP strength is not ruled out, but it is unclear if there is enough momentum for it to reach 1.3595, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Further GBP strength is not ruled out

24-HOUR VIEW: “GBP rose sharply to a high of 1.3544 last Friday. Yesterday, Monday, when GBP was at 1.3515, we pointed out that ‘deeply overbought conditions suggest GBP is unlikely to rise much further.’ We expected GBP to ‘trade in a range of 1.3465/1.3545.’ While GBP did not rise further, it did not trade in a range either, as it dropped sharply to a low of 1.3447. Despite the sharp decline, there has been no clear increase in downward momentum, and instead of continuing to weaken, GBP is more likely to trade in a range today, probably between 1.3440 and 1.3520.”

1-3 WEEKS VIEW: “Following the sharp rise in GBP last Friday, we indicated yesterday (25 Aug, spot at 1.3515) that ‘while further GBP strength is not ruled out, it is currently unclear if there is enough momentum for it to reach 1.3595.’ We also indicated that ‘if GBP breaks below 1.3425, it would mean that it is likely to trade within a range instead of strengthening.’ Although upward momentum is slowing after GBP pulled back to a low of 1.3447, we continue to hold the same view for now.”