GBP/USD now faces the next hurdle at 1.3740 – UOB
In opinion of FX Strategists at UOB Group, GBP/USD remains poised to visit the 1.3740 region ahead of 1.3800 in the short-term horizon.
Key Quotes
24-hour view: “We highlighted yesterday that ‘solid upward momentum suggests GBP could continue to rise towards 1.3660’. We added, ‘the next resistance at 1.3700 is likely out of reach for today’. The subsequent GBP strength exceeded our expectations as it surged to a high of 1.3715 during NY session. While GBP could strengthen further today, overbought conditions suggest a slower pace of advance and a sustained rise above 1.3740 appears unlikely (next resistance is at 1.3800 is not expected to come into the picture for today). On the downside, a breach of 1.3650 (minor support is at 1.3670) would indicate that the current GBP strength is ready to take a break.”
Next 1-3 weeks: “We have expected a stronger GBP since late last week. In our latest narrative from yesterday (12 Jan, spot at 1.3635), we highlighted that ‘further GBP strength is likely’ and ‘the next resistance is at 1.3660 followed by 1.3700’. Our view was correct even though we did not quite expect the rapid manner by which GBP rush above 1.3700 (high of 1.3715). While the rapid rise is overbought, further GBP strength would not be surprising. That said, overbought conditions suggest a slower pace of advance. The next resistance is at 1.3740 followed by 1.3800. Overall, the current GBP is intact as long as it does not move below 1.3620 (‘strong support’ level was at 1.3560 yesterday).”