GBP/USD: Door open to a test of 1.2450 near term – UOB

In the opinion of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, GBP/USD could now pick up pace and revisit the 1.2450 region in the near term.

Key Quotes

24-hour view: “Our view for GBP to edge lower yesterday was incorrect as it rose to 1.2393 before ending the day at 1.2387 (+0.59%). While upward momentum has increased, GBP has to break the major resistance at 1.2400 before a sustained advance is likely. The chance of GBP breaking above 1.2400 is on the high side. That said, the next resistance at 1.2450 is a significant level and might not be easy to breach. The upside risk is intact as long as GBP stays above 1.2340 (minor support is at 1.2365).”

Next 1-3 weeks: “Two days ago (29 Mar, spot at 1.2330), we highlighted that ‘upward momentum appears to be building but GBP has to break and stay above 1.2400 before a sustained advance is likely’. We added, ‘The likelihood of a clear break of 1.2400 is not high for now but it will remain intact as long as GBP stays above 1.2240 in the next 1-2 days’. Yesterday, GBP rose to a high of 1.2393. While GBP did not break 1.2400, the vastly improved upward momentum suggests GBP is likely to head higher to 1.2450. A breakthrough this significant resistance level could potentially lead to an upward acceleration. On the downside, the ‘strong support’ level has moved higher to 1.2300 from 1.2240. Looking ahead, the next level to watch above 1.2450 is at 1.2550.”