Firmer underlying tone suggests Pound Sterling (GBP) could retest the 1.3615 level against US Dollar (USD); the next resistance at 1.3655 is unlikely to come under threat. In the longer run, GBP could edge higher; given the current momentum, any advance may not be able to break clearly above 1.3655, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
GBP has a chance to edge higher
24-HOUR VIEW: "We stated yesterday that 'a slight increase in momentum suggests an upside bias, but GBP is unlikely to break clearly above 1.3600.' However, the price movements did not quite turn out as we expected. GBP edged higher until the early NY session, when it popped above 1.3600, reaching 1.3616 before retreating quickly and closed slightly higher by 0.11% at 1.3571. The brief rise above 1.3600 did not result in any increase in upward momentum. However, the firmer underlying tone suggests GBP could retest the 1.3615 level before a pullback is likely. The next resistance at 1.3655 is unlikely to come under threat. Support is at 1.3555; a breach of 1.3530 would indicate that GBP has entered a range-trading phase."
1-3 WEEKS VIEW: "We have held the same view since Tuesday (03 Jun, spot at 1.3555), wherein 'there has been an increase in short-term upward momentum, but for a sustained advance, GBP must first close above 1.3600.' Yesterday, GBP broke above 1.3600 and then pulled back to close at 1.3571. While the slight increase in upward momentum is not enough to indicate a sustained advance just yet, as long as the ‘strong support’ at 1.3500 (level previously at 1.3470) is not breached, GBP could edge higher. That said, given the current momentum, any advance may not be able to break clearly above 1.3655."
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