British Pound: Upward momentum targets 1.3700 against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang reports GBP/USD at 1.3640 remains supported after breaking key resistance levels, with intraday gains likely capped between 1.3605 and 1.3670. Over the next 1–3 weeks, he expects the Pound to continue rising toward 1.3700, provided it holds above 1.3570, while longer-term signals still point to range trading.

Pound advance eyes major resistance

“24-HOUR VIEW: GBP soared to a high of 1.3630 two days ago. Yesterday, we highlighted the following: “The sharp rise appears to be overdone. This, combined with deeply overbought conditions, suggests that instead of continuing to rise, GBP is more likely to consolidate between 1.3570 and 1.3630.” Our view of consolidation was incorrect as GBP rose to a high of 1.3661. GBP closed 0.19% higher at 1.3632. Further GBP strength is not ruled out, but deeply overbought conditions suggest any advance could be contained within a 1.3605/1.3670 range. Even if GBP breaks above 1.3670, it is unlikely to reach the major resistance at 1.3700.”

“1-3 WEEKS VIEW: We highlighted on Monday (17 Aug, spot at 1.3540) that “the upside bias in GBP remains intact, but any advance is expected to face firm resistance at 1.3600.” After GBP surged and broke above 1.3600, we highlighted yesterday (19 Aug, spot at 1.3600) that “further GBP strength remains likely, but with negative divergence forming on momentum indicators, this time around, any advance is expected to face firm resistance at 1.3655.” We underestimated the strength of the upward momentum as GBP subsequently broke above 1.3655 with a high of 1.3661. Having surpassed 1.3655, GBP could continue to rise toward 1.3700. To keep the momentum going, GBP must hold above 1.3570 (‘strong support’ level was at 1.3535 yesterday).”

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