In the view of Economist Lee Sue Ann and Markets Strategist Quek ser Leang at UOB Group, further upside could now lift GBP/USD to the 1.2790 region in the next few weeks.

Key Quotes

24-hour view: We highlighted yesterday that GBP “is likely to rise further”. We added, “barring a surge in momentum, the major resistance at 1.2680 is likely out of reach today”. GBP rose more than expected as it surged to a high of 1.2699 before easing off to close at 1.2661 ( 0.38%). Conditions are severely overbought and the chance for a sustained break above 1.2700 is not high. Today, GBP is more likely to consolidate in a range of 1.2595/1.2700. 

Next 1-3 weeks: We turned positive in GBP last Friday (09 Jun, spot at 1.2555) but we indicated that “it remains to be seen if it has enough momentum to revisit last month’s high near 1.2680”. Yesterday (14 Jun, spot at 1.2600), we stated that “the boost in momentum suggests that 1.2680 is likely to come into view”. While our view was correct, we did not quite expect GBP to surpass 1.2680 so soon (GBP soared to a high of 1.2699 in NY trade). Upward momentum remains robust, and we continue to expect GBP to strengthen. The next level to watch is 1.2790. On the downside, a breach of 1.2560 (‘strong support’ level previously at 1.2515) indicates GBP is not rising further.