British Pound: Upside momentum targets 1.3405 against US Dollar – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note GBP/USD surprised with a stronger-than-expected surge to 1.3371 before easing to 1.3329. Intraday, the British Pound (GBP) is now seen consolidating between 1.3290 and 1.3360 as overbought conditions cool. Over the next 1–3 weeks, however, upward momentum is still building, and UOB sees scope for a push toward resistance at 1.3405 while support sits at 1.3260.

Pound retains constructive short term tone

"24-HOUR VIEW: Following the advance in GBP that reached a high of 1.3278 last Thursday, we indicated on Friday that “while there is scope for GBP to continue to rise, any advance should stay within a 1.3240/1.3295 range.” We did not expect upward momentum to strengthen so quickly, as GBP soared to a high of 1.3371. GBP pulled back from the high to close at 1.3329 (+0.40%). Upward momentum has slowed with the pullback. This, combined with overbought conditions, suggests that instead of continuing to rise, GBP is more likely to rangetrade between 1.3290 and 1.3360."

"1-3 WEEKS VIEW: The following are excerpts from our update last Friday (16 Oct, spot at 1.3270): “GBP could edge higher toward 1.3315. Currently, it is too early to determine whether momentum will strengthen sufficiently for a break above this level. To sustain the momentum buildup, GBP must hold above the ‘strong support’ level, now at 1.3210.” Instead of edging higher, GBP broke above 1.3315 and soared to a high of 1.3371. Upward momentum continues to increase, and GBP could rise toward 1.3405 next. On the downside, the ‘strong support’ level is now at 1.3260."

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