Price action suggests the rally is pausing; Pound Sterling (GBP) is likely to trade in a range between 1.3040 and 1.3200 vs US Dollar (USD). In the longer run, overbought conditions could lead to a couple of days of range-trading; there is a chance for GBP to test 1.3300 later on, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
GBP is likely to trade in a range between 1.3040 and 1.3200
24-HOUR VIEW: "After GBP surged on Wednesday, we highlighted yesterday that 'while the sharp rally appears to be excessive, it is not showing any signs of pausing just yet.' However, we pointed out, “given the deeply overbought conditions, GBP is unlikely to break clearly above 1.3080.” GBP easily broke above 1.3080 and reached 1.3207 before pulling back sharply to close at 1.3100 (+0.68%). The price action suggests that the rally is pausing. Today, we expect GBP to trade in a range between 1.3040 and 1.3200."
1-3 WEEKS VIEW: "Yesterday, 03 Apr, when GBP was at 1.3030, we highlighted the following: 'Upward momentum is building rapidly, but GBP must break and hold above 1.3080 before further gains are likely. The likelihood of GBP breaking clearly above 1.3080 will remain intact as long as 1.2940 is not breached.' We did not anticipate GBP to surge to 1.3207. While deeply overbought short-term conditions could lead to a couple of days of range-trading, as long as 1.2940 (no change in ‘strong support’ level from yesterday) is not breached, there is a chance for GBP to test the major weekly resistance at 1.3300 later on."
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