GBP/USD: Momentum improves further and targets 1.3910 – UOB

FX Strategists at UOB Group noted Cable’s upward bias keeps improving and now focuses on the 1.3900 mark and above in the near term.

Key Quotes

24-hour view: “We expected a stronger GBP yesterday but we were of the view that ‘a sustained advance above 1.3800 is unlikely’. We underestimated GBP strength as it surged to 1.3840 before closing on a firm note at 1.3833 (+0.48%). Solid upward momentum suggests that the current advance in GBP is likely to break 1.3850 and head towards 1.3885. For today, the major resistance at 1.3910 is likely out of reach. Support is at 1.3810 followed by 1.3790.

Next 1-3 weeks: “Yesterday, we highlighted that GBP is still in a consolidation. We added, ‘looking ahead, a break of 1.3850 would indicate that GBP is ready to head higher’. That said, we did not quite anticipate GBP to approach 1.3850 so quickly (high of 1.3840 in NY). In view of the vastly improved upward momentum, a break of 1.3850 would not be surprising and GBP could head to 1.3910 next. Overall, only an unlikely breach of 1.3760 (‘strong support’ level) within these few days would indicate that GBP is not ready to head higher.”