GBP/USD could advance to 1.2900 near term – UOB

Extra gains could see GBP/USD revisiting the 1.2900 region in the next few weeks, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: We highlighted yesterday that “while severely overbought, the advance in GBP has room to break above 1.2700 before the risk of a pullback increases”. We added, “The next major resistance at 1.2790 is highly unlikely to come into view”. We did not expect GBP to accelerate upwards to within one pip of 1.2790 (high of 1.2789). Today, GBP is likely to break 1.2790. In view of the severely overbought conditions, it is unlikely to challenge the next resistance at 1.2850. On the downside, a breach of 1.2710 (minor support is at 1.2750) indicates that GBP is rising further,  

Next 1-3 weeks: Yesterday (15 Jun, spot at 1.2665), we held the view that GBP “is likely to strengthen further” and “the next level to watch is 1.2790”. Our view was correct, but we did not quite expect GBP to rise towards 1.2790 so quickly (high has been 1.2789). Not surprisingly, conditions are severely overbought. However, only a breach of 1.2630 (‘strong support’ level was at 1.2560) indicates that the GBP strength that started one week ago has ended. On the upside, the next level to aim for is 1.2900.