Unlikely to reach the major resistance at 1.3400 – UOB Group

The Pound Sterling (GBP) could edge higher but is unlikely to reach the major resistance at 1.3400. In the longer run, there has only been a slight increase in momentum, and it remains to be seen if GBP can break above 1.3400, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

To remain bullish above 1.3250

24-HOUR VIEW: “Yesterday, we expected GBP to trade in a range between 1.3270 and 1.3340. We did not anticipate the ensuing volatility as GBP fell sharply, but briefly to 1.3249, snapping back up to reach a high of 1.3360. Despite the strong advance from the low, upward momentum has not increased much. Today, GBP could edge higher, but it is unlikely to reach the major resistance at 1.3400 (there is another resistance at 1.3370). Support is at 1.3325; a breach of 1.3300 would indicate that the current upward pressure has faded.”

1-3 WEEKS VIEW: “We have held a positive GBP view since early last week (see annotations in the chart below). In our latest narrative from last Friday (20 Sep, spot at 1.3280), we highlighted that “while the price action continues to suggest GBP strength, overbought conditions could potentially limit any further advance.” We added, “the next level to watch is 1.3350.” Yesterday (23 Sep, spot at 1.3310), we indicated that “while GBP could rise above 1.3350, the potential of it reaching 1.3400 seems low for now.” GBP subsequently rose to 1.3360. There has only been a slight increase in momentum, and it remains to be seen if GBP can break above the significant resistance at 1.3400. On the downside, should GBP break below 1.3250 (‘strong support’ level previously at 1.3210), it would mean that it is not strengthening further.”