May have enough momentum to test 1.3320 – UOB Group

The Pound Sterling (GBP) appears to have enough momentum to test 1.3320 before leveling off. In the longer run, price action continues to suggest GBP strength; overbought conditions could limit gains, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Bullish momentum leads towards 1.3320

24-HOUR VIEW: “We expected GBP to trade in a sideways range of 1.3150/1.3250 yesterday. However, after dropping to 1.3155, GBP soared, breaking above 1.3300 (high of 1.3314). GBP closed on a firm note at 1.3286 (+0.54%). While the rapid rise appears to be overextended, GBP seems to have enough momentum to test 1.3320 before leveling off. The next resistance at 1.3350 is unlikely to come under threat. Support is at 1.3255; a breach of 1.3230 would suggest that the current upward pressure has faded.”
1-3 WEEKS VIEW: “The next level to watch is 1.3350. On Tuesday (17 Sep, spot at 1.3210), we indicated that GBP ‘could potentially break above this year’s high, near 1.3270.’ After GBP rose to 1.3298, we indicated yesterday (19 Sep, spot at 1.3200) that ‘further GBP strength is not ruled out, but any advance is expected to face significant resistance at 1.3300.’ The ease with which GBP took out 1.3300 was surprising (GBP rose to 1.3314 in NY trade). While the price action continues to suggest GBP strength, overbought conditions could potentially limit any further advance. The next level to watch is 1.3350. On the downside, should GBP break below 1.3160 (‘strong support’ level previously at 1.3120), it would mean that GBP is not strengthening further.”