Further gains in GBP/USD target the 1.2450 region in the near term, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
24-hour view: “We expected GBP to weaken yesterday but we were of the view that ‘the major support at 1.2250 is unlikely to come under threat’. GBP dropped briefly to 1.2275 in NY trade before rebounding strongly to close at 1.2375 (+0.47%). The advance has room to extend but a sustained rise above 1.2450 appears unlikely. Support is at 1.2360, followed by 1.2330.”
Next 1-3 weeks: “Our most recent narrative was from Tuesday (31 Jan, spot at 1.2350) where we indicated that GBP has likely moved into a consolidation phase and is likely to trade between 1.2250 and 1.2430 for the time being. GBP soared to a high of 1.2395 in NY trade and upward momentum is beginning to build. However, GBP must break and stay above 1.2450 before a sustained advance is likely. The next resistance level above 1.2450 is at 1.2510. The odds of GBP breaking clearly above 1.2450 would increase as long as GBP stays above the ‘strong support’ level, currently at 1.2300.”