GBP/USD now looks to 1.4010 – UOB

Cable remains firm and could attempt a move to 1.4010 in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected GBP to ‘trade sideways within a 1.3860/1.3920 range yesterday’. GBP subsequently drifted to a low of 1.3863 but during NY session, it rallied sharply to 1.3951. Rapid improvement in momentum is expected to lead to further GBP strength. That said, the rapid rise appears to be running ahead of it itself and major resistance at 1.4010 is unlikely to come into the picture (there is another resistance at 1.3980). Support is at 1.3925 followed by 1.3900.”

Next 1-3 weeks: “We have expected GBP to ‘trade between 1.3750 and 1.3950’ since last Friday (23 Apr, spot at 1.3845). In our latest narrative from Tuesday (26 Apr, spot at 1.3880), we highlighted that ‘looking ahead, a break of 1.3950 would not be surprising but GBP has to close above 1.3980 before a sustained advance can be expected’. GBP surged during NY session and while it did not close above 1.3980, the sharp and rapid advance has resulted in a vastly improved momentum. From here, GBP is expected to trade with an upward bias towards 1.4010. At this stage, the prospect for a sustained rise above this major resistance is not high. On the downside, a break of 1.3850 (‘strong support’ level) would indicate that GBP is not ready to move higher.”