Overbought advance in the Pound Sterling (GBP) could extend to 1.2970 before a pullback can be expected. Risk remains on the upside; overbought conditions suggest 1.3000 might not come into view so soon, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

Upside risk intact above 1.2855

24-HOUR VIEW: “While we expected GBP to break above 1.2860 yesterday, we were of the view that ‘the next major resistance at 1.2900 is unlikely to come into view.’ The anticipated GBP strength exceeded our expectations, as it soared to a high of 1.2949. Despite being overbought, the advance in GBP could extend to 1.2970 before a pullback can be expected. The next major resistance at 1.3000 is unlikely to come into view. Should GBP break below 1.2880 (minor support at 1.2900), it would mean that the current upward pressure has eased.”

1-3 WEEKS VIEW: “Last Thursday (04 Jul, spot at 1.2745), we indicated that ‘the risk for GBP has shifted to the upside.’ After GBP rose, in our update from yesterday (11 Jul, spot at 1.2845), we pointed out that ‘the price action continues to suggest upside risk, and the next level to monitor is 1.2900.’ GBP broke above 1.2900 in a hurry as it soared, reaching a high of 1.2949 in NY trade. While the risk remains on the upside, overbought conditions suggest 1.3000 might not come into view so soon. The upside risk is intact as long as 1.2855 (‘strong support’ level was at 1.2775 yesterday) is not breached.”