According to UOB Group FX analysts Quek Ser Leang and Peter Chia, the balance of risk for Pound Sterling (GBP) remains skewed to the upside. However, there is currently uncertainty regarding whether the upward momentum is sufficient to breach the 1.3570 level.
24-HOUR VIEW: Yesterday, we anticipated range-trading between 1.3400 and 1.3460 due to a lack of clear momentum shift. Contrary to this expectation, after an initial dip to 1.3402, GBP executed a surprisingly sharp rally, briefly piercing major resistance at 1.3505 to touch a high of 1.3507. While further strength cannot be ruled out today, deeply overbought conditions suggest a sustained break above 1.3525 is unlikely, and the monthly high near 1.3570 is not expected to come into play. Downside support is seen initially at 1.3480, with firmer support at 1.3460.
1-3 WEEKS VIEW: On January 21 (with spot at 1.3440), we noted a near-term upside tilt toward 1.3505 but questioned the momentum’s ability to achieve a clear break. Yesterday’s sudden rally to a high of 1.3507 has reinforced that the risk for GBP remains to the upside. However, it remains unclear if the current bullish momentum is strong enough to overcome significant resistance at 1.3570. This upside bias will remain intact as long as GBP holds above the newly adjusted ‘strong support’ level at 1.3430 (previously located at 1.3380)
