GBP/USD: Overbought conditions suggest any advance is unlikely to reach 1.3600 – UOB Group

Strong momentum indicates further Pound Sterling (GBP) strength; overbought conditions suggest any advance is unlikely to reach 1.3600. In the longer run, upward momentum remains strong; the next objective is 1.3635, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum remains strong

24-HOUR VIEW: "Following last Thursday’s price action, we indicated on Friday that 'The price action provides no fresh clues, and we continue to expect consolidation today, most likely within a range of 1.3375/1.3450.' We did not expect GBP to surge to 1.3550. While strong upward momentum indicates further GBP strength, overbought conditions suggest that any advance is unlikely to reach 1.3600. Note that there is another resistance level at 1.3570. On the downside, any intraday pullback is likely to hold above 1.3475, with minor support at 1.3505."

1-3 WEEKS VIEW: "We revised our GBP outlook to positive in the middle of last week (see annotations in the chart below). In our latest narrative from last Thursday (22 May, spot at 1.3420), we indicated that 'momentum indicators continue to point to GBP upside, and the next technical target is at 1.3500.' GBP broke above 1.3500 last Friday, reaching a high of 1.3550. Upward momentum remains strong, and the next objective is 1.3635. We will continue to expect GBP strength as long as 1.3420 (‘strong support’ level previously at 1.3340) is not breached."