Following the sharp rebound, GBP/USD could now extend the rebound to 1.1450 in the next weeks, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “The strong surge in GBP that sent it to a high of 1.1333 came as a surprise (we were expecting GBP to trade sideways). While overbought, the advance is not showing any sign of easing just yet. In other words, GBP could continue to rise even though the chance of a break of 1.1400 is not high (next resistance is at 1.1450). Support is at 1.1260 but only a breach of 1.1215 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Last Friday (30 Sep, spot at 1.1150), we indicated that the recent weakness in GBP has bottomed and we held the view that the strong rebound could extend but is unlikely to challenge 1.1300. However, the rebound in GBP took out 1.1300 yesterday as it rose to a high of 1.1333 before closing on a strong note at 1.1325 (+1.43%). Short-term conditions are overbought but upward momentum still appears to be firm and the rebound in GBP could extend further to 1.1450. Overall, only a breach of 1.1000 (‘strong support’ level was at 1.0800 yesterday) would indicate that GBP is unlikely to rebound further.”