Further gains could lift GBP/USD to the 1.2400 region in the next few weeks, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While we expected GBP to strengthen yesterday, we held the view that ‘a sustained rise above 1.2220 appears unlikely’. We did not anticipate the strong advance as GBP soared to 1.2286 before closing a firm note at 1.2277 (+0.79%). Strong upward momentum suggests further GBP strength towards 1.2330. The major resistance at 1.2400 is likely out of reach today. The upside risk is intact as long as GBP stays above 1.2220 (minor support is at 1.2250).”

Next 1-3 weeks: “We noted yesterday (20 Mar, spot at 1.2180) that ‘upward momentum is beginning to build’. We held the view that GBP ‘has to break and stay above 1.2220 before a sustained rise is likely (the next resistance is at 1.2270)’. We did not anticipate the rapid improvement in momentum, as GBP easily took out both 1.2220 and 1.2270 and surged to 1.2286. The price actions suggest GBP is likely to strengthen further to 1.2400. The strong support at 1.2180 (level was at 1.2095 yesterday) is likely to hold, at least for the next couple of days.”