United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann report that GBP/USD broke above their prior resistance level as the British Pound (GBP) outperformed on Tuesday, invalidating an earlier mildly bearish view. For the next 24 hours they see scope for a retest of nearby resistance but doubt a sustained break higher, while over 1–3 weeks they expect only a modest grind toward the next upside level, contingent on holding key support.

Pound edges higher within set bands

“24-HOUR VIEW: Following GBP’s price action two days ago, we stated yesterday that “there has been no clear shift in either downward or upward momentum.” We indicated that GBP “is likely to range-trade between 1.3195 and 1.3245.” Our view of range-trading was incorrect, as GBP rose to a high of 1.3286. Upward momentum has increased, albeit not significantly. Today, there is a chance for GBP to retest 1.3285. A continued rise above this level is unlikely. The major resistance at 1.3315 is also unlikely to come under threat. Support is at 1.3240, followed by 1.3220.”

“1-3 WEEKS VIEW: In our most recent narrative from last Friday (02 Oct, spot at 1.3195), we noted that “while downward momentum is building again, it is not strong for now.” We were of the view that GBP “is likely to edge lower toward the major support at 1.3140.” Yesterday, GBP rose and broke above our ‘strong resistance’ level at 1.3265, invalidating our view. There has been a slight increase in upward momentum, and this time around, GBP may edge higher toward 1.3315. Based on the prevailing momentum, a continued rise above 1.3315 is unlikely. To sustain mild upward momentum, GBP must hold above the ‘strong support’ level, now at 1.3200.”