Room for the Pound Sterling (GBP) to edge higher, but any advance is unlikely to break above 1.3455. In the longer run, GBP must break and hold above 1.3455 to resume strength, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
GBP must hold above 1.3455 to resume strength
24-HOUR VIEW: “Our view for GBP to ‘continue to decline’ yesterday was incorrect. Instead of declining, GBP rose and reached a high of 1.3434. Despite the relatively strong advance, there has been no significant increase in momentum. Today, there is room for GBP to edge higher, but any advance is unlikely to break above 1.3455. Support is at 1.3375, followed by 1.3340.”
1-3 WEEKS VIEW: “Yesterday (26 Sep, spot at 1.3325), we indicated that ‘the more than week-long GBP strength has ended.’ We expected GBP to ‘trade in a 1.3200/1.3430 range for the time being.’ We did not anticipate GBP to test 1.3430 as quickly, as it rose to a high of 1.3434 in NY trade. While upward momentum seems to be building again, it is not enough to indicate the resumption of GBP strength. GBP must break and hold above 1.3455 before further advance to 1.3500 can be expected. The likelihood of GBP breaking clearly above 1.3455 appears low for now, but it will remain intact as long as 1.3310 is not breached within these few days.”
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