Further Pound Sterling (GBP) strength is not ruled out. As rapid rise is approaching overbought levels, 1.2860 is unlikely to come under threat. Nevertheless, risk for GBP remains on the upside, and 1.2860 is the level to watch, UOB Group FX strategists note.
1.2860 is the level to watch
24-HOUR VIEW: “Our view for GBP to trade sideways last Friday was incorrect, as it rose, rising above the solid resistance level at 1.2805. GBP then closed on a firm note at 1.2814 (+0.44%). While the rapid rise is approaching overbought levels, further GBP strength is not ruled out. However, the significant resistance at 1.2860 is highly unlikely to come under threat. Note that there is another resistance level at 1.2840. Support is at 1.2785; a breach of 1.2770 would mean that GBP is not advancing further.”
1-3 WEEKS VIEW: “While we turned positive in GBP last Thursday (04 Jul, spot at 1.2745), we pointed out that ‘there is a solid resistance level at 1.2805, ahead of last month’s high of 1.2860.’ Last Friday, GBP broke above 1.2805, reaching a high of 1.2817. Not surprisingly, the risk for GBP remains on the upside, and the level to watch is 1.2860. The upside risk is intact as long as GBP remains above 1.2740 (‘strong support’ level was at 1.2685 last Friday).”
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