In the opinion of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, further upside in GBP/USD needs to leave behind the 1.2270 level in the next few weeks.

Key Quotes

24-hour view: “We highlighted last Friday that ‘upward momentum has improved a tad but while GBP is likely to trade with an upward bias, it is unlikely to break 1.2270’. GBP subsequently rose to 1.2250, dropped to 1.2153 before rebounding to close at 1.2234 (+0.17%). Despite the choppy price actions, the underlying tone appears to be firm and GBP is likely to edge higher. However, a clear break of 1.2270 still appears unlikely. Support is at 1.2200, followed by 1.2170.”

Next 1-3 weeks: “Our update from last Friday (13 Jan, spot at 1.2215) is still valid. As highlighted, in order to keep the momentum going, GBP must break 1.2270 these 1-2 days or the prospect of further GBP strength would diminish quickly. Conversely, a break of 1.2125 (‘strong support’ level was 1.2100 last Friday) would indicate that GBP is not advancing further. Looking ahead, above 1.2270, there is a significant resistance level at 1.2305.”