In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, GBP/USD could still advance to the 1.2450 zone in the next few weeks. We highlighted yesterday that ‘the bias for GBP is still on the upside but a sustained advance above 1.2445 is unlikely’. However, after rising briefly to 1.2431, GBP pulled back to 1.2345 before rebounding quickly to close little changed at 1.2412 (+0.09%).
While upward momentum has waned, there is room for GBP to test 1.2450 first before the risk of a more sustained pullback increases. The major resistance at 1.2500 is not expected to come into view. Support is at 1.2385, followed by 1.2350.
There is no change in our view from yesterday (26 Jan, spot at 1.2400) that GBP is likely to edge above 1.2450 but as upward momentum is not strong, it remains to be seen if GBP can break 1.2500. Overall, only a breach of 1.2300 (no change in ‘strong support’ level) would indicate that the current mild upward pressure has eased.