GBP/USD: May test 1.3000 after breaking above the current range – UOB Group

The Pound Sterling (GBP) is likely to consolidate in a range of 1.2940/1.2995. GBP must break above 1.3000 before further advance can be expected, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

Rangebound between 1.2940 and 1.2995

24-HOUR VIEW: “We indicated yesterday that GBP ‘could pullback, but any decline is unlikely to threaten the support at 1.2915.’ We noted that ‘resistance levels are at 1.2985 and 1.3000.’ Our view did not materialise as GBP traded between 1.2960 and 1.2995, closing slightly lower at 1.2967 (-0.17%). The current price action is likely part of a consolidation phase. Today, we expect GBP to trade in a 1.2940/1.2995 range.”

1-3 WEEKS VIEW: “In our most recent narrative from last Friday (12 Jul, spot at 1.2925), we indicated that ‘the risk for GBP remains on the upside, but overbought conditions suggest 1.3000 might not come into view so soon.’ Yesterday, GBP edged to a high of 1.2995 and then pulled back. The 1.3000 level is turning out to be a significant resistance, and GBP must break above this level before further advance can be expected. Looking ahead, the next level to watch above 1.3000 is at 1.3045. The risk of GBP breaking clearly above 1.3000 will remain intact as long as 1.2885 (‘strong support’ level was at 1.2870 yesterday) is not breached.”