Further gains still likely in GBP/USD – UOB

In opinion of FX Strategists at UOB Group, further upside in Cable looks likely in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘while GBP could strengthen’, we noted ‘overbought conditions suggest a slower pace of advance and a sustained rise above 1.3740 appears unlikely’. Our view was correct as GBP rose to 1.3749 before easing off. Upward momentum is beginning to ease and this coupled with still overbought conditions suggest that GBP is likely to consolidate for today, expected to be within a range of 1.3680/1.3740.”

Next 1-3 weeks: “Yesterday (13 Jan, spot at 1.3705), we highlighted that further GBP strength would not be surprising, albeit likely at a slower pace. We noted the next resistance level is at 1.3740 followed by 1.3800. GBP subsequently rose to 1.3749 before easing off. While there is still room for GBP to advance further, the next resistance at 1.3800 may not come into the picture so soon. On the downside, a breach of 1.3640 (‘strong support’ level was at 1.3620 yesterday) would indicate that the GBP strength that started late last week has run its course.”