The continuation of the upside momentum could motivate GBP/USD to challenge the 1.2600 neighbourhood in the next few weeks, suggest Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that GBP ‘is likely to break 1.2525 but it might not be able to hold above this level’. We added, ‘The next significant resistance level at 1.2600 is not expected to come into view today’. As expected, GBP took out 1.2525 as it rose to a high of 1.2537. Despite the advance, upward momentum has not improved much. While GBP could continue to advance, 1.2600 is still unlikely to come into view today (there is a minor resistance level at 1.2560). Support is at 1.2500, a break of 1.2475 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “We highlighted yesterday (13 Apr, spot at 1.2490) that ‘the rapid improvement in momentum suggests GBP is ready to head higher’. We noted resistance levels are at 1.2525 and 1.2600. Our view for a higher GBP was not wrong as it rose above 1.2525 (high has been 1.2537). While momentum has not increased by all that much, GBP is likely to advance further to 1.2600, possibly 1.2665. On the downside, a break of 1.2440 (‘strong support’ level was at 1.2400 yesterday) would indicate that our view for GBP to continue to rise is wrong.”