In the opinion of UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, extra upside in GBP/USD lies on a breakout of the 1.1440 region.

Key Quotes

24-hour view: “We expected GBP to ‘trade within a broad range of 1.1130/1.1330’ yesterday. Our expectation was incorrect as GBP soared to 1.1440 before pulling back. While upward momentum has waned with the pullback, the current price movement is regarded as part of a consolidation instead of a reversal. In other words, GBP is likely to trade sideways for today, with the expected range being between 1.1280 and 1.1440.”

Next 1-3 weeks: “Last Friday (14 Oct, spot at 1.1310), we highlighted that the rapid rally in GBP has gained momentum and we were of the view that GBP could rise to 1.1440. Yesterday (17 Oct), GBP soared to 1.1440 before pulling back. Upward momentum has improved further, albeit not by much. While the risk for GBP remains on the upside, it has to break clearly above 1.1440 before further sustained advance is likely. Note that there is another major resistance at 1.1500. Overall, only a break of 1.1220 (‘strong support’ level was at 1.1120 yesterday) would indicate that GBP is not strengthening further.”