GBP/USD now faces a major resistance at 1.2640, suggested FX Strategists at UOB Group Quek Ser Leang and Peter Chia.

Key Quotes

24-hour view: “While we expected GBP to strengthen yesterday, we were of the view that ‘the major resistance at 1.2580 is unlikely to come into the picture’. The subsequent GBP strength exceeded our expectations as it soared to 1.2601 before easing off. From here, GBP could move above 1.2600 but in view of the overbought conditions, a break of the next major resistance at 1.2640 is unlikely (there is another resistance at 1.2620). On the downside, a breach of 1.2525 (minor support is at 1.2550) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (23 May, spot at 1.2505), we highlighted that mild upward pressure could lead to GBP edging higher to 1.2580. We did not expect the rapid rise as GBP soared to a high of 1.2601. While upward momentum has not improved by all that much, GBP could advance towards the major resistance at 1.2640. Overall, GBP is expected to trade of a firm footing as long as it does not move below 1.2480 (‘strong support’ level was at 1.2400 yesterday).”